Interim Report - SEB · Assets under management SEK bn Net inflow Value change * 129 147 174 4.8...

SEB Interim Report January–September 2019

Interim Report January–September 2019

STOCKHOLM 23 OCTOBER 2019

SEB Interim Report January–September 2019 2

Interim Report January–September 2019

The quarter in brief

Solid financial performance despite seasonal slowdown and softer macroeconomic environment

Broad-based demand for advisory services, lending and capital market financing

Swedish mortgage net sales in line with SEB’s market share

Summary

Q3 Full year

SEK m 2019 2019 % 2018 % 2019 2018 % 2018Total operating income 11 942 12 197 -2 11 433 4 36 045 34 123 6 45 868Total operating expenses -5 589 -5 708 -2 -5 421 3 -16 918 -16 379 3 -21 940Net expected credit losses - 489 - 386 27 - 424 15 -1 297 - 753 72 -1 166Operating profit beforeitems affecting comparability 5 864 6 103 -4 5 587 5 17 831 17 011 5 22 779Operating profit 5 864 6 103 -4 5 587 5 17 831 21 517 -17 27 285NET PROFIT 4 772 4 892 -2 4 539 5 14 346 18 558 -23 23 134

Return on equity, % 13.2 13.9 12.7 13.1 17.7 16.3Return on equity excluding items affecting comparability, % 13.2 13.9 13.1 13.2 13.6 13.4

Basic earnings per share, SEK 2.21 2.26 2.10 6.64 8.57 10.69

Q2 Q3 Jan–Sep

Volumes and key ratios

1 664 1 645

1 859

1 2161 111

1 206

Sep - 18 Dec - 18 Sep - 19

Loans Deposits

Loans to and deposits from the publicSEK bn

1 699

1 94344

200

Dec -18 Sep -19

Assets under managementSEK bn

Net inflow

Value change

*

129

147

174

4.8 5.14.5

Sep - 18 Dec - 18 Sep - 19

LCR Leverage ratio

Liquidity coverage & Leverage ratiosPer cent

*

19.7

17.616.4

13.6 13.4 13.2

Sep -18 Dec -18 Sep - 19

CET1 capital ratio RoE*

CET 1 capital ratio & Return on equityPer cent

*Excluding items affecting comparability


In the third quarter, leading economic indicators pointed to further slowdown in global economic growth. With inflation at low levels, central banks responded to downside growth risks by lowering interest rates and continued quantitative easing.

The Federal Reserve cut rates twice, to 2.0 per cent, in 2019. In the third quarter the European Central Bank cut the deposit rate by 10 basis points to negative 0.50 per cent and resumed its asset purchase programme, driving the 10-year German government bond yield to a record-low level. As interest rates have fallen, the amount of negative-yielding debt soared to around USD 17 trillion, corresponding to nearly 30 per cent of all bonds outstanding. This negative-yield environment is a challenge for the financial industry, particularly for life and pension insurance companies, as pension liabilities increase as discount rates fall. In contrast, the accommodative monetary policy actions gave continued support to equity and other asset prices during the quarter. The Swedish krona depreciated by 1.6 and 5.8 percentage points, respectively versus the euro and US dollar, during the quarter. Solid financial performance in an uncertain market Despite a softening macroeconomic environment and a seasonal slowdown, clients remained active in the third quarter and we continued to execute on our strategic focus areas: advisory leadership, operational excellence and extended presence.

In the division Large Corporates & Financial Institutions, income generated from advisory services as well as bank and capital markets financing resulted in a year-on-year increase in operating income of 7 per cent. SEB’s custody business experienced strong inflows of assets – SEK 563bn in the third quarter – which was particularly rewarding as this has been one of the top investment areas for SEB over the last years. In the short term, the pipeline for lending and investment banking activity continues to look promising. However, SEB recognises that the macroeconomic outlook has continued to weaken.

The division Corporate & Private Customers experienced another quarter with strong financial performance and SEB’s ranking in external customer satisfaction surveys improved. Lending growth remained strong and SEB continued to grow its market share within corporate and mortgage lending, while margins on new sales remained stable. Assets under management increased by SEK 11bn in the third quarter.

Within the Life division, margin pressure on insurance and pension services continued. Thus, cross-selling and process automation remain key for profitability and economies of scale to be maintained. In the Investment Management division, financial performance was primarily driven by higher market values, while net inflows of assets under management were muted. In the Baltics, demand for financial services remained high, but SEB maintained its balanced growth path in line with strategy.

To sum up, our diversified business model remains favourable. The operating profit before items affecting comparability increased by 5 per cent compared with the same period last year, while return on equity reached 13.2 per cent. Asset quality was high with net expected credit losses at 0.08 per cent. SEB reported a capital buffer of 170 basis points above regulatory requirements. The buffer remains in line with our target, aiming to ensure that we have the financial strength needed to support our customers going forward. Responding to changing customer behaviour The long-term trend of our customers going more digital continues, with the mobile app being the preferred channel in SEB. Today, mobile interactions represent more than 80 per cent of all customer interactions in SEB in Sweden and we continue to see increasing activity in both the private and corporate segments. As a response to our customers’ behaviour, we continue to execute on our transformation agenda, focusing on connectivity, automation and analytics in order to enhance efficiency, reduce risk and improve customer experience. Innovation is also an important part of our transformation agenda and during the third quarter, SEBx – which is our independent innovation venture – entered into a partnership with the fintech company, Thought Machine, to use its cloud-based core banking engine as part of its technology platform.

Similar to digitalisation, sustainability continues to grow as a theme among customers, investors and regulators. Sustainability has been an integrated part of SEB’s business for many years and we continue to develop sustainable products and services. We recognise that climate change is a global challenge in need of international collaboration. In the third quarter, SEB was therefore one of 131 banks globally to sign the UNEP FI Principles for Responsible Banking. By committing to these principles, SEB is contributing to the establishment of an industry-wide strategic framework aiming to increase banks’ positive impact on environment and society.

President’s comment


Table of contents

SEB Group 5 The first nine months _______________________________________________________ 5 The third quarter __________________________________________________________ 6 Business volumes _________________________________________________________ 7 Business development ______________________________________________________ 8 Other information ________________________________________________________ 10

Financial statements 11 Income statement, condensed _______________________________________________ 11 Statement of comprehensive income ___________________________________________ 12 Balance sheet, condensed __________________________________________________ 13 Statement of changes in equity _______________________________________________ 14 Cash flow statement, condensed ______________________________________________ 15

Other financial information 16 Key figures _____________________________________________________________ 16 Income statement on a quarterly basis __________________________________________ 17

Operating segments 18 Income statement by segment _______________________________________________ 18 Large Corporates & Financial Institutions ________________________________________ 19 Corporate & Private Customers _______________________________________________ 20 Baltic _________________________________________________________________ 21 Life __________________________________________________________________ 22 Investment Management & Group functions ______________________________________ 23

Notes to the financial statements 24 Note 1 Accounting policies __________________________________________________ 24 Note 2 Net interest income __________________________________________________ 24 Note 3 Net fee and commission income _________________________________________ 25 Note 4 Net financial income _________________________________________________ 26 Note 5 Net expected credit losses _____________________________________________ 26 Note 6 Items affecting comparability ___________________________________________ 27 Note 7 Pledged assets and obligations __________________________________________ 27 Note 8 Financial assets and liabilities ___________________________________________ 28 Note 9 Assets and liabilities measured at fair value _________________________________ 29 Note 10 Exposure and expected credit loss (ECL) allowances by stage ___________________ 31 Note 11 Movements in allowances for expected credit losses (ECL) _____________________ 33 Note 12 Loans and expected credit loss (ECL) allowances by industry ____________________ 34

SEB consolidated situation 35 Note 13 Capital adequacy analysis ____________________________________________ 35 Note 14 Own funds _______________________________________________________ 36 Note 15 Risk exposure amount _______________________________________________ 37 Note 16 Average risk-weight ________________________________________________ 37

Skandinaviska Enskilda Banken AB (publ) – parent company 38 Income statement ________________________________________________________ 38 Statement of comprehensive income ___________________________________________ 38 Balance sheet, condensed __________________________________________________ 39 Pledged assets and obligations _______________________________________________ 39 Capital adequacy ________________________________________________________ 40

Signature of the President __________________________________________________ 41 Auditor’s review report ____________________________________________________ 41 Contacts and calendar _____________________________________________________ 42 Definitions _____________________________________________________________ 43


SEB Group

The first nine months Operating profit before items affecting comparability increased by SEK 820m, 5 per cent, and amounted to SEK 17,831m (17,011). There were no items affecting comparability in the first nine months 2019, but in 2018 such items amounted to SEK 4,506m (see note 6). Net profit amounted to SEK 14,346m (18,558). Operating income Total operating income increased by SEK 1,922m, 6 per cent, compared with the first nine months 2018 and amounted to SEK 36,045m (34,123).

Net interest income amounted to SEK 17,020m, which represented an increase of 8 per cent year-on-year (15,807).

ChangeSEK m 2019 2018 %Customer-driven NII 18 902 17 314 9NII from other activities -1 882 -1 507 25Total 17 020 15 807 8

Jan–Sep

Customer-driven net interest income includes the net

interest income derived from loans to and deposits from the public and also reflects an internal funding pricing element. Customer-driven net interest income increased by SEK 1,588m year-on-year. There was a positive lending volume effect, which however was offset by the negative lending margin development. The Swedish repo rate increased in the beginning of the year and the compensation to the divisions for deposits from treasury was higher. In all, this led to a positive deposit margin effect.

Net interest income from other activities (including for instance funding and other treasury activities, trading and regulatory fees) was SEK 375m lower year-on-year. One explanatory factor was treasury’s internal compensation for deposits. Applying IFRS 16, the new accounting rules for leases, increased interest expense by SEK 70m. Regulatory fees, for both resolution funds and deposit guarantees, were SEK 264m lower year-on-year and amounted to SEK 1,607m (1,871). In 2019, the resolution fund fee was reduced to 0.09 per cent from 0.125 for 2018 (see page 10).

Net fee and commission income was slightly higher than the first nine months 2018 and amounted to SEK 13,719m (13,517).

The mergers and acquisitions activities were fairly high throughout the year. Compared with the first nine months 2018, gross fees from the issuance of securities and advisory services increased by SEK 240m. Gross fee income from

custody and mutual funds, excluding performance fees, decreased by SEK 299m year-on-year (see note 3). Customers’ new investments were primarily made in products with lower margins. Performance fees increased by SEK 37m compared with the first nine months of 2018. Net payment and card fees increased by 5 per cent year-on-year to SEK 3,016m (2,880). Gross lending fees increased by SEK 245m year-on-year as loan volumes increased. The net life insurance commissions related to the unit-linked insurance business decreased by SEK 99m year-on-year. The decrease was partly due to the divestment of SEB Pension in 2018 (see note 6).

Net financial income increased by 5 per cent to SEK 4,795m (4,567).

Both companies and financial institutions were active in managing their risks and investment portfolios especially in the earlier part of the year when market volatility was higher. There were also positive market valuation effects. The effect in the fair value credit adjustment1) was negative and amounted to SEK -268m (38). Other life insurance income, net, decreased by SEK 364m to SEK 503m year-on-year, primarily due to the divestment of SEB Pension (see note 6). There was also a decrease in income from traditional insurance due to lower long-term interest rates.

Net other income increased to SEK 510m (233). Realised capital gains as well as unrealised valuation and hedge accounting effects were included in this line item. Operating expenses Total operating expenses increased by 3 per cent to 16,918m (16,379).

Staff costs increased by 2 per cent due to the strategic initiatives, salary inflation and accruals for variable long-term remuneration. The average number of full-time equivalents increased to 14,909 (14,751 for the full-year 2018). IFRS 16 effects decreased other expenses and increased depreciation costs. Ordinary supervisory fees amounted to SEK 114m (118).

The cost target in the business plan for 2019-2021 is described on page 10. Operating expenses related to the strategic initiatives increased according to plan.

Net expected credit losses Net expected credit losses remained low and amounted to SEK 1,297m (753). Asset quality was high and the net expected credit loss level was continued low at 8 basis points (5). Items affecting comparability There were no items affecting comparability in the first nine months of 2019. In the corresponding period 2018, items affecting comparability amounted to SEK 4,506m (see note 6).

1) Unrealised valuation change from counterparty risk (CVA) and own credit risk standing in derivatives (DVA). Own credit risk for issued securities (OCA) is reflected in Other comprehensive income.

Comparative numbers (in parenthesis throughout the report): The result for the first nine months 2019 are compared with the first nine months 2018. The result for the third quarter 2019 is compared with the second quarter 2019. Business segments comparisons year-to-date 2019 are made to year-to-date 2018. Business volumes are compared with year-end 2018, unless otherwise stated.


Income tax expense Income tax expense amounted to SEK 3,486m (2,959) with an effective tax rate of 20 per cent (14).

As per 1 January 2019, the Swedish corporate tax rate decreased from 22 to 21.4 per cent, which had a small effect on SEB’s effective tax rate. The effective tax rate was also affected by certain small tax-exempt income. Return on equity Return on equity for the first nine months of 2019 was 13.1 per cent (17.7). Excluding items affecting comparability return on equity for the first nine months 2019 was 13.2 per cent (13.6). Other comprehensive income Other comprehensive income amounted to SEK -2,200m (1,407).

The value of SEB’s pension plan assets exceeded the defined benefit obligations to the employees. The discount rate used for the pension obligation in Sweden was 0.75 per cent (2.0 at year-end 2018) which increased the pension obligation substantially. The value of the pension assets increased but the net value of the defined benefit pension plan decreased which affected other comprehensive income by SEK -2,334m (1,252).

The net effect from the valuation of balance sheet items that may subsequently be reclassified to the income statement, i.e. cash flow hedges and translation of foreign operations amounted to SEK 184m (72).

The third quarter Operating profit was seasonally lower in the third quarter and decreased by SEK 239m, 4 per cent, to SEK 5,864m (6,103). Net profit amounted to SEK 4,772m (4,892). Compared with the third quarter 2018, the operating profit improved by 5 per cent. Operating income Total operating income decreased by SEK 255m, 2 per cent, compared with the second quarter 2019 and amounted to SEK 11,942m (12,197). Operating income increased by 4 per cent compared with the third quarter 2018.

Net interest income amounted to SEK 5,983m, which represented an increase of 5 per cent compared with the second quarter (5,692) and an increase by 12 per cent year-on-year.

Q3 Q2 Q3

SEK m 2019 2019 2018Customer-driven NII 6 298 6 238 6 041NII from other activities -315 -546 -722Total 5 983 5 692 5 319 Customer-driven net interest income increased by SEK 60m compared with the second quarter 2019. A positive lending volume effect was partially offset by a negative lending margin development. Deposit margins decreased, primarily driven by lower compensation for deposits from treasury in the third quarter. There was an opposite effect in net interest income from other activities, i.e. treasury. Other short-term effects, related to Markets operations, contributed positively to net interest income. Regulatory fees, including both resolution fund and deposit guarantee fees, were SEK 38m higher than the second quarter and amounted to SEK 581m (542). Both fee types were affected by risk adjustments. In total, net interest income from other activities improved by SEK 231m compared with the second quarter 2019.

Net fee and commission income decreased by 1 per cent from the second quarter and amounted to SEK 4,693m (4,735). Year-on-year, net fee and commission income increased by 4 per cent.

Gross fees from the issuance of securities and advisory services increased by SEK 42m in the third quarter and almost doubled year-on-year. Gross fee income from custody and mutual funds, excluding performance fees, increased by SEK 47m in the third quarter, driven by improved equity markets. Performance fees decreased by SEK 45m in the third quarter, however, due to seasonality. Net payment and card fees decreased by 4 per cent in the third quarter when customer activity was seasonally lower. Gross lending fees decreased by SEK 50m in the third quarter but increased by SEK 110m year-on-year. The net life insurance commissions related to the unit-linked insurance business increased by 2 per cent compared with the second quarter 2019.

Net financial income decreased by 19 per cent to SEK 1,196m (1,482) and decreased by 21 per cent year-on-year.


The fair value credit adjustment1) amounted to SEK -160m versus -102m in the second quarter. Other life insurance income, net, dropped by 25 per cent quarter on quarter, to SEK 150m and by 22 per cent compared with the third quarter 2018. Traditional insurance was challenged in the current interest rate environment.

Net other income decreased by 76 per cent to SEK 70m (287). Realised capital gains as well as unrealised valuation and hedge accounting effects were included in this line item. Operating expenses Total operating expenses decreased by 2 per cent to SEK 5,589m (5,708). Compared with the third quarter 2018, operating expenses increased by 3 per cent.

Staff costs levelled out and remained on the same level as the second quarter. Other expenses decreased by 4 per cent mainly due to seasonal effects. Ordinary supervisory fees amounted to SEK 33m (41).

Net expected credit losses Net expected credit losses remained low and amounted to SEK 489m (386). Asset quality was high and the net expected credit loss level was continued low at 9 basis points (7). Items affecting comparability There were no items affecting comparability in the third quarter 2019. Income tax expense Income tax expense amounted to SEK 1,092m (1,211) with an effective tax rate of 19 per cent (20). Return on equity Return on equity for the third quarter 2019 decreased to 13.2 per cent (13.9). Other comprehensive income Other comprehensive income amounted to SEK -1,511m (-237).

The value of SEB’s pension plan assets exceeded the defined benefit obligations to the employees. The discount rate used for the pension obligation in Sweden was 0.75 per cent (1.2 at 30 June) and the pension obligation increased. The net value of the defined benefit pension plan assets and liabilities decreased which affected other comprehensive income by SEK -1,473m (-265).

The net effect from the valuation of balance sheet items that may subsequently be reclassified to the income statement, i.e. cash flow hedges and translation of foreign operations amounted to SEK -80m (101).

1) Unrealised valuation change from counterparty risk (CVA) and own credit risk standing in derivatives (DVA). Own credit risk for issued securities (OCA) is reflected in Other comprehensive income.

Business volumes Total assets at 30 September 2019 amounted to SEK 3,046bn, representing an increase of SEK 478bn since year-end (2,568). Loans

30 Sep 31 Dec 30 SepSEK bn 2019 2018 2018General governments 17 19 24Financial corporations 79 68 76Non-financial corporations 882 806 808Households 622 598 592Collateral margin 58 56 48Reverse repos 201 98 116Loans to the public 1 859 1 645 1 664

Loans to the public increased by SEK 214bn since year-end 2018 and amounted to SEK 1,859bn (1,645). Loans to non-financial corporations increased by SEK 76bn and household lending increased by SEK 24bn. While reverse repos (contractual agreements to buy and subsequently sell back securities) increased significantly, these volumes are generally short-term in nature.

SEB measures and monitors its credit risk exposure in the credit portfolio, which includes loans, contingencies and derivatives. More information about the credit portfolio is available on page 8.

Deposits and borrowings

30 Sep 31 Dec 30 SepSEK bn 2019 2018 2018General governments 40 27 27Financial corporations 226 226 334Non-financial corporations 503 461 447Households 344 323 318Collateral margin 55 49 53Repos 28 3 14Registered bonds 10 21 24Deposits and borrowings from the public 1 206 1 111 1 216 Deposits and borrowings from the public increased by SEK 95bn to SEK 1,206bn (1,111). Deposits from non-financial corporations and households increased by SEK 63bn in 2019, from a low level at year-end. Repos, which are generally short-term in nature, increased by SEK 25bn in 2019. Assets under management and custody Total assets under management amounted to SEK 1,943bn (1,699). The market value increased by SEK 200bn of which SEK 16bn was an FX-effect. The net inflow of assets since year-end amounted to SEK 44bn. In the third quarter standalone, the market value increased by SEK 39bn while there was a net outflow of SEK 29bn. The net outflow was caused by low-fee business volumes that were held for customers, but not proactively managed. Other assets under management flows developed positively.

Assets under custody increased compared with year-end and amounted to SEK 9,267bn (7,734). The increase was mainly driven by the stock market appreciation and a number of large new custody mandates.


Business development In Sweden, SEB was named Business Bank of the Year for 2019 by Finansbarometern – an acknowledgement of the bank’s strategic direction. Furthermore, the result of the Swedish Quality Index survey showed that SEB’s customer satisfaction improved more than the industry average both among private and corporate customers.

A number of transformative actions and initiatives are underway within each of the focus areas in SEB’s business plan: Advisory leadership SEB’s private banking services are continuously under improvement. In the third quarter, private banking customers were provided access to a comprehensive overview of their investments including historical development and asset allocations. This significant improvement provides a better basis for advice and investment decisions. SEB signed the UNEP Principles for Responsible Banking that are in line with the UN Development Goals and the Paris climate agreement. The bank is committed to continue to adapt the business strategy accordingly and has undertaken to measure and follow up its positive and negative climate impact. SEB also joined the non-profit association the Swedish National Advisory Board for Impact Investing. The purpose is to promote and mobilise private, institutional and non-governmental funding of solutions to challenges in society. Impact investments combine social, environmental and financial goals for a common good. Operational excellence SEB Campus, a key component in the business plan, was launched. This digital learning platform provides a wide choice of education. All co-workers have been challenged to spend twenty hours during the remainder of the year to drive their own development. Increasing efficiency and customer value through improved ways of working is constantly underway in various parts of the bank. Examples include an automated application process for new mortgage loans, improved information and services to customers nearing pension, reallocating certain insurance administration to the Baltic service center, automating controls of regulatory reporting and automatic monitoring of payment transactions to prevent financial crime and ensure regulatory compliance. Extended presence SEBx – SEB’s independent innovation venture – entered into a partnership with the fintech company, Thought Machine, to use its cloud-based core banking engine as part of its technology platform.

SEB’s mobile bank app is taking advantage of the open banking opportunities. In the third quarter, private individuals were provided the possibility to have an aggregated overview of their accounts, savings and loans in other banks, not just SEB.

In addition to free bank services, the student offering was enhanced to include six months of home insurance for free via the mobile bank app. This is in co-operation with the insurance company Hedvig.

Risk, capital and uncertainties SEB assumes credit, market, liquidity, IT and operational as well as life insurance risks. The risk composition of the Group, as well as the related risk, liquidity and capital management, are described in SEB’s Annual Report for 2018 (see page 44-49 and notes 41 and 42), in the Capital Adequacy and Risk Management Report for 2018 as well as the quarterly additional Pillar 3 disclosures. Further information is available in the Fact Book that is published quarterly. Credit risk

30 Sep 31 Dec 30 SepSEK bn 2019 2018 2018Banks 98 93 100Corporates 1 293 1 146 1 133Commercial real estate managment 191 186 186Residential real estate management 126 110 108Housing co-operative associations Sweden 63 63 63Public administration 61 55 65Household mortgage 588 552 552Household other 88 87 87Total credit portfolio 2 510 2 292 2 294

Certain balances in the credit portfolio disclosure were reclassified during the first quarter 2019 to better reflect the portfolio characteristics. Historic information has been restated. The geographic split of the credit portfolio as presented in the Fact Book is now based on SEB's operations which matches where profits are reported. Furthermore, collateral margin is reflected based on an exposure-at-default amount rather than a nominal amount and repos are now included, also based on an exposure-at-default value. SEB’s credit portfolio, which includes loans, contingent liabilities and derivatives, increased by SEK 218bn to SEK 2,510bn (2,292). The corporate credit portfolio increased by SEK 147bn, or 13 per cent. The FX-adjusted corporate growth was 6 per cent. The household credit portfolio increased by SEK 38bn and commercial and residential real estate management increased by SEK 21bn.

Credit-impaired loans, gross (stage 3) increased since year-end by SEK 3,083m to SEK 11,242m. The gross credit-impaired loans (stage 3) were 0.65 per cent of total loans. Market risk SEB’s business model is mainly driven by customer demand. 10-day Value-at-Risk (VaR) in the trading book increased during the first nine months and averaged SEK 102m compared with SEK 90m for the year 2018. The Group does not expect to lose more than this amount, on average, during a period of ten trading days with 99 per cent probability.

VaR decreased to SEK 99m in the third quarter (114 for the second quarter) mainly due to lower interest rate risk.

Liquidity and long-term funding Short-term funding, in the form of commercial paper and certificates of deposit, increased by SEK 200bn since year-end 2018. The reason for the increase was mainly the fulfilment of regulatory requirements on liquidity coverage in key currencies.

SEK 98bn of long-term funding matured during the first nine months of 2019 (of which SEK 52bn covered bonds and SEK 46bn senior debt). New issuance since year-end amounted to SEK 86bn (of which SEK 65bn was covered bonds and SEK 22bn senior preferred debt).

The liquid assets defined according to the EU delegated act with regard to liquidity coverage requirements amounted to SEK 567bn at 30 September 2019 (403). The Liquidity


Coverage Ratio (LCR) must be at least 100 per cent. At the end of the quarter, the LCR was 174 per cent (147).

The bank is committed to a stable funding base. SEB’s internal structural liquidity measure, Core Gap, which measures the proportion of stable funding in relation to illiquid assets, was 108 per cent (110). Rating Moody's rates SEB’s long-term senior unsecured debt at Aa2 with a stable outlook reflecting SEB’s asset quality and solid capitalisation underpinned by strong earnings generation capacity and good profitability.

Fitch rates SEB’s long-term senior unsecured debt at AA- with a stable outlook. The rating is based on SEB’s strong capital and leverage ratios, sound asset quality and healthy liquidity profile.

S&P rates SEB’s long-term senior unsecured debt at A+ with a stable outlook. The rating is based on the bank’s leading corporate franchise, strong capitalisation underpinned by stable earnings and sound asset quality. Capital position The following table shows the risk exposure amount (REA) and capital ratios according to Basel III:

30 Sep 31 Dec 30 SepOwn funds requirement, Basel III 2019 2018 2018Risk exposure amount, SEK bn 777 716 632Common Equity Tier 1 capital ratio, % 16.4 17.6 19.7Tier 1 capital ratio, % 18.5 19.7 22.1Total capital ratio, % 20.9 22.2 25Leverage ratio, % 4.5 5.1 4.8 SEB’s Common Equity Tier 1 (CET1) capital ratio was 16.4 per cent (17.6). The implementation of IFRS 16 in the first quarter lowered the CET 1 ratio by 15 basis points, all else equal. Otherwise, the main reason for the decrease in the CET1 capital ratio was the increase by SEK 61bn in REA (see table).

SEB's estimate of the full Pillar 1 and 2 CET1 capital requirements – where the Pillar 2 requirements were calculated according to the methods set by the Swedish Financial Supervisory Authority (SFSA) – was 14.7 per cent per the end of the period (14.9 at year-end). The Swedish countercyclical buffer increased by 0.3 percentage units in the third quarter, but was offset by lower Pillar 2 requirements for pension risk and interest rate risk in the banking book. The bank aims to have a buffer of around 150 basis points above the capital requirement. The buffer shall cover sensitivity to currency fluctuations, changes in net value of the Swedish defined benefit pension plan as well as general macroeconomic uncertainties. Currently the buffer is 170 basis points.

Risk exposure amount Jan-Sep

SEK bn 2019Balance 31 Dec 2018 716Asset size 22Asset quality 1Foreign exchange movements 20Model updates, methodology & policy, other 8Underlying market and operational risk changes 9- where of market risk 8- where of operational risk 0- where of CVA risk 1Balance 30 Sep 2019 777

Total REA increased by SEK 61bn to SEK 777bn since year-end 2018. Foreign exchange movements and increasing credit volumes, primarily corporate, contributed to higher credit risk REA. Market risk REA increased in the second quarter but reverted somewhat in the third quarter. Model updates increased REA by SEK 8bn, primarily due to the implementation of IFRS 16 and updated credit risk models in the Baltic division.

In accordance with SFSA requirements, the additional REA related to the mortgage risk-weight floor was reclassified from a Pillar 2 to a Pillar 1 requirement per 31 December 2018. This REA amounted to SEK 95bn at the end of the period (92 at year-end). Internally assessed capital requirement As per 30 September 2019, the internally assessed capital requirement, including insurance risk, amounted to SEK 70bn (67). The internal capital requirement is assessed using SEB’s internal models for economic capital and is not fully comparable to the estimated capital requirement published by the SFSA due to differences in assumptions and methodologies.

The internally assessed capital requirement for the parent company amounted to SEK 67bn (62).


Other information Long-term financial targets SEB’s long-term financial targets are: to pay a yearly dividend that is 40 per cent or above of the

earnings per share, to maintain a Common Equity Tier 1 capital ratio of around

150 bps above the current requirement from the SFSA, and

to generate a return on equity that is competitive with peers.

In the long term, SEB aspires to reach a sustainable return on equity of 15 per cent.

Cost target SEB’s business plan for 2019-2021 defines a number of strategic initiatives, which on an accumulated basis, are estimated to lead to total additional investments of SEK 2-2.5bn during the three year period 2019-2021. This translates into an annual cost increase of SEK 1bn by 2021, and a new total cost target of around SEK 23bn by 2021, assuming 2018 FX-rates. The pace of investments will be dependent on progress and will be gradually ramped up over the coming three years. The strategic initiatives are expected to lead to both improved revenue growth and cost efficiencies, improving return on equity over time. Resolution fund fee requirement change Swedish authorities decided that the resolution fund fee for 2019 shall be reduced from 0.125 to 0.09 per cent applied to the adjusted 2017 balance sheet volumes. The fee will be reduced to 0.05 per cent from 2020 up until the resolution fund target is met. The fund target level, proposed to represent 3 per cent of guaranteed deposits in Sweden, is expected to be reached by the year 2021.

Currency effects Compared with the second quarter 2019, operating income would have been SEK 6m lower with unchanged currency exchange rates while operating expenses would have been SEK 5m lower for the same period. Compared with the first nine months 2018, operating income would have been SEK 417m lower with unchanged currency exchange rates while operating expenses would have been SEK 193m lower for the same period. Compared with year-end the positive currency effect on loans to and deposits from the public was SEK 37bn and 33bn, respectively. Total REA reflects a SEK 20bn positive currency effect while total assets were SEK 70bn higher. Uncertainties Macroeconomic indicators are contributing to growing concerns around a noticeable slowdown in growth. The large global economic imbalances and geopolitical as well as trade uncertainties remain. The potential reduction of liquidity support to financial markets from central banks worldwide may create direct and indirect effects that are difficult to assess. SEB does not currently forecast any change in the

Swedish repo rate, which is currently -0.25 per cent, until 2021.

The German Federal Ministry of Finance issued a circular on 17 July 2017 with administrative guidance in relation to withholding taxes on dividends in connection with certain cross-border securities lending and derivative transactions; so-called cum-cum transactions. The circular states an intention to examine transactions executed prior to the change in tax legislation that was enacted 1 January 2016. Ongoing audits by the local tax administration have to date resulted in preliminary minor reclaims on selected tax years. SEB has requested that these reclaims should be revoked. Following a review, SEB is of the opinion that the cross-border securities lending and derivative transactions of SEB in Germany up until 1 January 2016 were conducted in compliance with then prevailing rules. Hence, to date no provisions have been made. Nevertheless, it cannot be ruled out that the outcome of potential future tax claims may have a negative financial effect on SEB.

SEB is subject to various legal regimes and requirements in all jurisdictions where the bank operates. Over the past years, the rules and regulations of the financial industry have expanded and further sharpened and the regulators have increased their supervision. This is a development, which is expected to continue to evolve. Supervisory authorities regularly conduct reviews of SEB’s regulatory compliance, including areas such as financial stability, transaction reporting, anti-money laundering, investor protection, and data privacy. SEB has policies and procedures in place with the purpose to always comply with applicable rules and regulations. Anti-money laundering (AML) reviews are ongoing in several jurisdictions, including the Nordic and the Baltic countries. In Latvia, as part of the regular supervisory activities, the local financial supervisory authority is conducting an AML review. It is expected to be resolved in the coming quarter and may lead to criticism and/or sanction.

Organisational changes Masih Yazdi (Finance Director) has been appointed Group CFO. He will continue to report to the President & CEO and remain member of the GEC. Nina Korfu-Pedersen (Head of Group Finance) has been appointed Head of Business Support & Operations. She will continue to report to the President & CEO and remain member of the GEC. Petra Ålund (Head of Technology) has been appointed member of the GEC and will report to the President & CEO. Nicolas Moch (CIO) will report to Petra Ålund and will also be joining as member of the GEC. Martin Johansson has been appointed Senior Advisor to the President & CEO and will leave his current role as Head of Business Support & Chief of Staff. He will leave as member of the Group Executive Committee (GEC) and continue as one of its additional members. Javiera Ragnartz (Head of Investment Management) and Mark Luscombe (Country Head of UK) have been appointed additional members of the GEC. All changes are effective as of 1 January 2020.


Financial statements – SEB Group Income statement, condensed

Q3 Full yearSEK m 2019 2019 % 2018 % 2019 2018 % 2018Net interest income1) 5 983 5 692 5 5 319 12 17 020 15 807 8 21 022Net fee and commission income 4 693 4 735 -1 4 512 4 13 719 13 517 2 18 364Net financial income 1 196 1 482 -19 1 506 -21 4 795 4 567 5 6 079Net other income 70 287 -76 97 -28 510 233 119 402Total operating income 11 942 12 197 -2 11 433 4 36 045 34 123 6 45 868

Staff costs -3 603 -3 618 0 -3 559 1 -10 853 -10 622 2 -14 004Other expenses1) -1 607 -1 680 -4 -1 681 -4 -4 877 -5 210 -6 -7 201Depreciation, amortisation and impairment of tangible and intangible assets1) - 379 - 410 -8 - 182 108 -1 188 - 547 117 - 735Total operating expenses -5 589 -5 708 -2 -5 421 3 -16 918 -16 379 3 -21 940

Profit before credit losses 6 353 6 489 -2 6 012 6 19 127 17 745 8 23 928

Gains less losses from tangible and intangible assets 1 0 - 1 1 20 -94 18Net expected credit losses - 489 - 386 27 - 424 15 -1 297 - 753 72 -1 166Operating profit beforeitems affecting comparability 5 864 6 103 -4 5 587 5 17 831 17 011 5 22 779

Items affecting comparability 4 506 -100 4 506Operating profit 5 864 6 103 -4 5 587 5 17 831 21 517 -17 27 285

Income tax expense -1 092 -1 211 -10 -1 048 4 -3 486 -2 959 18 -4 152NET PROFIT 4 772 4 892 -2 4 539 5 14 346 18 558 -23 23 134

Attributable to shareholders of Skandinaviska Enskilda Banken AB 4 772 4 892 -2 4 539 5 14 346 18 558 -23 23 134

Basic earnings per share, SEK 2.21 2.26 2.10 6.64 8.57 10.69Diluted earnings per share, SEK 2.20 2.25 2.09 6.60 8.52 10.63

Jan–SepQ2 Q3

1) IFRS 16 Leases is applied from 1 January 2019. The group has decided to apply the modified retrospective approach (no restatement made). Interest expense on lease liabilities and depreciation of right-of-use assets are replacing nearly all lease costs for premises from 2019.


Statement of comprehensive income

Q3 Full yearSEK m 2019 2019 % 2018 % 2019 2018 % 2018NET PROFIT 4 772 4 892 -2 4 539 5 14 346 18 558 -23 23 134

Cash flow hedges - 28 - 156 -82 - 114 -76 - 356 - 673 -47 - 880Translation of foreign operations - 52 257 - 198 -74 540 745 -28 582Items that may subsequently be reclassified to the income statement: - 80 101 -178 - 312 -74 184 72 156 - 298

Own credit risk adjustment (OCA)1) 41 - 73 - 17 - 50 83 221

Defined benefit plans -1 473 - 265 1 697 -2 334 1 252 - 846Items that will not be reclassified to the income statement: -1 432 - 339 1 680 -185 -2 384 1 335 - 625

OTHER COMPREHENSIVE INCOME - 1 511 - 237 1 368 - 2 200 1 407 - 923

TOTAL COMPREHENSIVE INCOME 3 261 4 655 -30 5 906 -45 12 145 19 964 -39 22 211

Attributable to shareholders of Skandinaviska Enskilda Banken AB 3 261 4 655 -30 5 906 -45 12 145 19 964 -39 22 211

1) Own credit risk adjustment from financial liabilities at fair value through profit or loss.

Jan–SepQ2 Q3


Balance sheet, condensed 30 Sep 1 Jan3) 31 Dec 30 Sep

SEK m 2019 2019 2018 2018Cash and cash balances at central banks 257 099 209 115 209 115 263 494Loans to central banks 3 647 33 294 33 294 17 481Loans to credit institutions2) 52 589 44 287 44 287 73 249Loans to the public 1 858 967 1 644 825 1 644 825 1 664 468Debt securities 259 661 156 128 156 128 216 908Equity instruments 74 113 50 434 50 434 57 617Financial assets for which the customers bear the investment risk 306 827 269 613 269 613 299 905Derivatives 170 033 115 463 115 463 123 163Other assets3) 63 260 50 296 44 357 61 979TOTAL ASSETS 3 046 196 2 573 455 2 567 516 2 778 264

Deposits from central banks and credit institutions 174 068 135 719 135 719 124 805Deposits and borrowings from the public1) 1 206 463 1 111 390 1 111 390 1 216 470Financial liabilities for which the customers bear the investment risk 307 605 270 556 270 556 300 842Liabilities to policyholders 25 834 21 846 21 846 21 638Debt securities issued 894 170 680 670 680 670 714 503Short positions 57 233 23 144 23 144 53 565Derivatives 133 830 96 872 96 872 104 422Other financial liabilities 3 725 3 613 3 613 4 417Other liabilities3) 97 180 81 099 74 916 91 353Total liabilities 2 900 109 2 424 910 2 418 727 2 632 016

Equity 146 088 148 545 148 789 146 248TOTAL LIABILITIES AND EQUITY 3 046 196 2 573 455 2 567 516 2 778 264

1) Deposits covered by deposit guarantees 308 681 292 238 292 238 285 1342) Loans to credit institutions and liquidity placements with other direct participants in interbank fund transfer systems.

3) IFRS 16 Leases is applied from 1 January 2019. The group has decided to apply the modified retrospective approach (i.e. no restatement made). Right-of-use assets are included in Other assets and lease liabilities are included in Other liabilities from 2019. Increase in Other assets at 1 January 2019 stems from an increase in Right-of-use assets SEK 5,747m, Deferred tax assets SEK 51m and Other assets SEK 141m. Increase in Other liabilities at 1 January is a result of an increase in Lease liabilities SEK 6,337m offset by decreases in Provisions SEK 122m and Other liabilities SEK 32m.

A more detailed balance sheet is available in the Fact Book.


Statement of changes in equity

SEK mShare

capital

Available-for-sale

financial assets OCA2)

Cash flow hedges

Translation of foreign

operations

Defined benefit

plansRetained earnings Equity

Jan-Sep 2019Opening balance 21 942 -286 313 -315 2 533 124 604 148 789Effect of applying IFRS 163) -244 -244Restated balance at 1 January 2019 21 942 -286 313 -315 2 533 124 360 148 545 Net profit 14 346 14 346 Other comprehensive income (net of tax) -50 -356 540 -2 334 -2 200Total comprehensive income -50 -356 540 -2 334 14 346 12 145Dividend to shareholders -14 069 -14 069Equity-based programmes5) -403 -403Change in holdings of own shares -131 -131Closing balance 21 942 -337 -44 225 199 124 102 146 088

Jan-Dec 2018Opening balance 21 942 729 1 192 -897 3 379 114 893 141 237Effect of applying IFRS 94) -729 -507 -1 160 -2 396Restated balance at 1 January 2018 21 942 -507 1 192 -897 3 379 113 732 138 841 Net profit 23 134 23 134 Other comprehensive income (net of tax) 221 -880 582 -846 -923Total comprehensive income 221 -880 582 -846 23 134 22 211Dividend to shareholders -12 459 -12 459Equity-based programmes5) -111 -111Change in holdings of own shares 307 307Closing balance 21 942 -286 313 -315 2 533 124 604 148 789

Jan-Sep 2018Opening balance 21 942 729 1 192 -897 3 379 114 893 141 237Effect of applying IFRS 94) -729 -507 -1 160 -2 396Restated balance at 1 January 2018 21 942 0 -507 1 192 -897 3 379 113 732 138 841 Net profit 18 558 18 558 Other comprehensive income (net of tax) 83 -673 745 1 252 1 407Total comprehensive income 83 -673 745 1 252 18 558 19 964Dividend to shareholders -12 459 -12 459Equity-based programmes5) -245 -245Change in holdings of own shares 146 146Closing balance 21 942 0 -424 519 -152 4 630 119 731 146 248

2) Fair value changes of financial liabilities at fair value through profit or loss attributable to changes in own credit risk.

5) Number of shares owned by SEB:Jan-Sep Jan-Dec Jan-Sep

Number of shares owned by SEB, million 2019 2018 2018Opening balance 30.3 27.1 27.1Repurchased shares for equity-based programmes 8.7 6.9 7.0Sold/distributed shares -5.7 -3.8 -3.2Closing balance 33.2 30.3 30.9

Market value of shares owned by SEB, SEK m 3 006 2 607 3 067

Other reserves1)

1) Amounts under Other reserves may be reclassified in the future to the income statement under certain circumstances, e.g. if they are related to dissolved Cash flow hedges or Translation of foreign operations when SEB ceases to consolidate a foreign operation. Amounts related to OCA and Defined benefit plans will not be reclassified to the income statement.

In accordance with the decision by the Annual General Meeting, SEB holds own shares of Class A for the long-term equity-based programmes. The transactions may take place at one or several occasions during the year. The acquisition cost for the purchase of own shares is deducted from shareholders' equity. The item includes changes in nominal amounts of equity swaps used for hedging of equity-based programmes.

4) IFRS 9 Financial Instruments is applied from 1 January 2018. Opening balance 2018 has been restated in fourth quarter 2018 with a positive amount of SEK 884m.3) IFRS 16 Leases is applied from 1 January 2019.


Cash flow statement, condensed Full year

SEK m 2019 2018 % 2018Cash flow from operating activities 48 202 81 078 - 41 28 259Cash flow from investment activities - 875 7 127 7 014Cash flow from financing activities - 14 069 - 12 459 13 - 12 459

Net increase in cash and cash equivalents 33 258 75 746 - 56 22 814

Cash and cash equivalents at the beginning of year 219 579 184 429 19 184 429Exchange rate differences on cash and cash equivalents 14 599 12 641 15 12 336Net increase in cash and cash equivalents 33 258 75 746 - 56 22 814

Cash and cash equivalents at the end of period1) 267 436 272 816 - 2 219 579

Jan–Sep

1) Cash and cash equivalents at the end of period is defined as Cash and cash balances with central banks and Loans to other credit institutions payable on demand.


Other financial information

Key figures Q3 Q2 Q3 Full year

2019 2019 2018 2019 2018 2018

Return on equity, % 13.2 13.9 12.7 13.1 17.7 16.3Return on equity excluding items affecting comparability1), % 13.2 13.9 13.1 13.2 13.6 13.4Return on total assets, % 0.6 0.7 0.7 0.7 0.9 0.8Return on risk exposure amount, % 2.5 2.6 2.9 2.5 4.0 3.7

Cost/income ratio 0.47 0.47 0.47 0.47 0.48 0.48

Basic earnings per share, SEK 2.21 2.26 2.10 6.64 8.57 10.69Weighted average number of shares2), millions 2 161 2 161 2 163 2 161 2 165 2 164

Diluted earnings per share, SEK 2.20 2.25 2.09 6.60 8.52 10.63Weighted average number of diluted shares3), millions 2 173 2 172 2 177 2 174 2 177 2 177

Net worth per share, SEK 74.32 72.78 75.07 74.32 75.07 74.74Equity per share, SEK 67.60 66.11 67.60 67.60 67.60 68.76Average shareholders' equity, SEK, billion 145.1 141.2 143.4 145.5 139.6 141.6

Net ECL level, % 0.09 0.07 0.08 0.08 0.05 0.06Stage 3 Loans / Total Loans, gross, % 0.65 0.64 0.48 0.65 0.50 0.50Stage 3 Loans / Total Loans, net, % 0.40 0.41 0.28 0.40 0.30 0.30

Liquidity Coverage Ratio (LCR)4), % 174 149 129 174 129 147

Own funds requirement, Basel IIIRisk exposure amount, SEK m 777 243 763 519 631 958 777 243 631 958 716 498Expressed as own funds requirement, SEK m 62 179 61 082 50 557 62 179 50 557 57 320Common Equity Tier 1 capital ratio, % 16.4 16.6 19.7 16.4 19.7 17.6Tier 1 capital ratio, % 18.5 18.7 22.1 18.5 22.1 19.7Total capital ratio, % 20.9 21.1 25.0 20.9 25.0 22.2Leverage ratio, % 4.5 4.6 4.8 4.5 4.8 5.1

Number of full time equivalents5) 14 887 14 988 14 531 14 909 14 769 14 751

Assets under custody, SEK bn 9 267 8 704 8 335 9 267 8 335 7 734Assets under management, SEK bn 1 943 1 932 1 871 1 943 1 871 1 699

Jan–Sep

2) The number of issued shares was 2,194,171,802. SEB owned 30,276,332 Class A shares for the equity based programmes at year-end 2018. During 2019 SEB has purchased 8,657,889 shares and 5,712,234 shares have been sold. Thus, at 30 September 2019 SEB owned 33,221,987 Class A-shares with a market value of SEK 3,006m.3) Calculated dilution based on the estimated economic value of the long-term incentive programmes. 4) In accordance with the EU delegated act.5) Quarterly numbers are for end of quarter. Accumulated numbers are average for the period.

1) Sale of SEB Pension and UC AB in Q2 2018.

In SEB’s Fact Book, this table is available with nine quarters of history.


Income statement on a quarterly basis

Q3 Q2 Q1 Q4 Q3SEK m 2019 2019 2019 2018 2018Net interest income1) 5 983 5 692 5 345 5 215 5 319Net fee and commission income 4 693 4 735 4 292 4 848 4 512Net financial income 1 196 1 482 2 118 1 512 1 506Net other income 70 287 153 169 97Total operating income 11 942 12 197 11 907 11 744 11 433

Staff costs -3 603 -3 618 -3 633 -3 382 -3 559Other expenses1) -1 607 -1 680 -1 590 -1 991 -1 681Depreciation, amortisation and impairment of tangible and intangible assets1) - 379 - 410 - 399 - 188 - 182Total operating expenses -5 589 -5 708 -5 622 -5 561 -5 421

Profit before credit losses 6 353 6 489 6 285 6 183 6 012

Gains less losses from tangible and intangible assets 1 0 0 - 2 - 1Net expected credit losses - 489 - 386 - 422 - 413 - 424Operating profit beforeitems affecting comparability 5 864 6 103 5 864 5 768 5 587

Items affecting comparabilityOperating profit 5 864 6 103 5 864 5 768 5 587

Income tax expense -1 092 -1 211 -1 182 -1 192 -1 048NET PROFIT 4 772 4 892 4 681 4 576 4 539

Attributable to shareholders of Skandinaviska Enskilda Banken AB 4 772 4 892 4 681 4 576 4 539

Basic earnings per share, SEK 2.21 2.26 2.16 2.12 2.10Diluted earnings per share, SEK 2.20 2.25 2.15 2.10 2.09

1) IFRS 16 Leases is applied from 1 January 2019. The group has decided to apply the modified retrospective approach (no restatement made). Interest expense on lease liabilities and depreciation of right-of-use assets are replacing nearly all lease costs for premises from 2019.


Operating segments

Income statement by segment

Jan-Sep 2019, SEK m

Large Corporates & Financial Institutions

Corporate & Private

Customers Baltic Life1)

Investment Management

& Group functions1) Eliminations SEB Group

Net interest income 6 921 8 051 2 387 - 11 - 367 39 17 020Net fee and commission income 4 735 4 093 1 212 1 882 1 733 65 13 719Net financial income 3 028 385 209 505 670 - 1 4 795Net other income 198 17 - 4 62 246 - 9 510Total operating income 14 883 12 545 3 805 2 438 2 281 93 36 045

Staff costs -3 123 -2 529 - 635 - 639 -3 939 11 -10 853Other expenses -3 823 -2 866 - 813 - 523 3 253 - 105 -4 877Depreciation, amortisation and impairment of tangible and intangible assets - 51 - 51 - 22 - 16 -1 048 -1 188Total operating expenses -6 997 -5 446 -1 470 -1 178 -1 734 - 93 -16 918

Profit before credit losses 7 886 7 099 2 334 1 260 547 0 19 127

Gains less losses from tangible and intangible assets 0 0 1 0 1Net expected credit losses - 933 - 301 - 41 - 1 - 13 - 7 -1 297Operating profit beforeitems affecting comparability 6 953 6 797 2 294 1 259 535 - 7 17 831

Items affecting comparabilityOperating profit 6 953 6 797 2 294 1 259 535 - 7 17 831

1) Investment Management & Group functions consists of Investment Management, business support, treasury, staff units and German run-off operations. As previously communicated, on 1 January 2019 SEB reorganised its operations by splitting the division Life & Investment Management into two separate divisions. The Life division is presented on a stand-alone basis. The Investment Management division is combined and reported with group functions as one segment in the interim Report and in addition presented separately in the Fact Book. Earlier periods have been restated in the segment information.


Large Corporates & Financial Institutions The division offers commercial and investment banking services to large corporate and institutional clients in the Nordic region, Germany and the United Kingdom. Customers are also served through an international network in some 20 offices.

Income statement Q3 Q2 Q3 Full year

SEK m 2019 2019 % 2018 % 2019 2018 % 2018

Net interest income 2 443 2 201 11 2 181 12 6 921 6 201 12 8 211Net fee and commission income 1 613 1 644 - 2 1 445 12 4 735 4 632 2 6 433Net financial income 753 921 - 18 772 - 3 3 028 2 482 22 3 384Net other income -50 237 ### 30 198 109 81 309Total operating income 4 759 5 003 - 5 4 427 7 14 883 13 424 11 18 337Staff costs -1 034 -1 056 - 2 -1 016 2 -3 123 -2 828 10 -3 858Other expenses -1 235 -1 304 - 5 -1 205 2 -3 823 -3 759 2 -4 990Depreciation, amortisation and impairment of tangible and intangible assets - 17 - 17 1 - 14 21 - 51 - 40 29 - 55Total operating expenses -2 286 -2 377 - 4 -2 235 2 -6 997 -6 628 6 -8 903Profit before credit losses 2 473 2 626 - 6 2 192 13 7 886 6 797 16 9 434Gains less losses from tangible and intangible assets 0 0 0 0 0 73 1Net expected credit losses -349 - 261 34 - 287 22 -933 - 443 111 - 702Operating profit before items affecting comparability 2 124 2 365 - 10 1 905 11 6 953 6 354 9 8 733Items affecting comparabilityOperating profit 2 124 2 365 -10 1 905 11 6 953 6 354 9 8 733

Cost/Income ratio 0.48 0.48 0.50 0.47 0.49 0.49Business equity, SEK bn 70.8 67.6 64.4 67.4 63.8 63.8Return on business equity, % 9.2 10.7 8.9 10.5 10.0 10.3Number of full time equivalents1) 2 058 2 056 1 990 2 050 1 982 1 986

Jan–Sep

1) Quarterly numbers are for end of quarter. Accumulated numbers are average for the period. Large corporate customers continued to be very active

Investments with sustainability criteria continued to grow rapidly among institutional investors

Operating profit amounted to SEK 6,953m and return on business equity was 10.5 per cent

Comments on the first nine months There was high customer activity across all product areas in the Large Corporate segment. After a cautious period, cash rich companies started to invest excess liquidity. Demand for cash management services was high. The lending portfolio increased, partly due to event-driven financing on the back of corporate finance activity. The low interest rates were favourable for new bond issues. Within the financial sponsor segment, customer activity decreased somewhat as a result of lower merger and acquisition volumes. The private equity market continued to be highly liquid with high asset prices.

Customers in the Financial Institutions segment became less active during the year as global macroeconomic concerns pushed the expected rate hikes into the future. Customers handled the uncertainty with cautiousness when hedging and allocating investments. While volatility and demand for traditional asset classes were low, the interest in illiquid investments, private equity and hedge funds increased.

Investments with sustainability criteria continued to grow, mainly driven by new regulatory requirements. Assets under custody increased to SEK 9,267bn (7,734), a proof of SEB’s attractive custody offering with several new mandates.

Operating income for the first nine months increased to SEK 14,883m. Net interest income improved to SEK 6,921m mainly due to increased lending and deposit volumes. Other factors were the reduced resolution fund fee and internal pricing on deposits. Net fee and commission income increased slightly to SEK 4,735m driven by bond issues and mergers and acquisitions. Net financial income increased to SEK 3,028m mainly related to higher market activity in the beginning of the year. Additional employees contributed to increased operating expenses. Asset quality was high, however net expected credit losses increased to SEK 933m with a net expected credit loss level of 11 basis points.


Corporate & Private Customers The division offers full banking and advisory services to private individuals and small and medium-sized corporate customers in Sweden, as well as card services in four Nordic countries. Nordic high net-worth individuals are offered leading private banking services with global reach.


SEK m 2019 2019 % 2018 % 2019 2018 % 2018

Net interest income 2 606 2 673 - 2 2 453 6 8 051 7 102 13 9 473Net fee and commission income 1 401 1 408 - 1 1 387 1 4 093 4 158 - 2 5 470Net financial income 116 122 - 5 101 15 385 310 24 429Net other income 6 4 31 5 20 17 41 - 59 47Total operating income 4 128 4 208 - 2 3 946 5 12 545 11 611 8 15 418Staff costs -836 - 822 2 - 838 0 -2 529 -2 499 1 -3 353Other expenses -932 - 974 - 4 - 911 2 -2 866 -2 738 5 -3 735Depreciation, amortisation and impairment of tangible and intangible assets - 21 - 16 31 - 14 48 - 51 - 43 19 - 58Total operating expenses -1 789 -1 811 - 1 -1 764 1 -5 446 -5 281 3 -7 146Profit before credit losses 2 339 2 396 - 2 2 182 7 7 099 6 331 12 8 272Gains less losses from tangible and intangible assets 0 0 0 131 0 0 - 12Net expected credit losses -129 - 101 28 - 97 34 - 301 - 312 - 3 - 427Operating profit before items affecting comparability 2 209 2 295 - 4 2 086 6 6 797 6 018 13 7 845Items affecting comparability 2 086 6 018 - 100Operating profit 2 209 2 295 - 4 2 086 6 6 797 6 018 13 7 845


Jan–Sep

1) Quarterly numbers are for end of quarter. Accumulated numbers are average for the period. Steady corporate lending growth

High market share on new household mortgage sales during the second and third quarter


Comments on the first nine monthsDuring the first nine months customer inflow and interaction were strong. New and appreciated functionalities were launched in the digital channels and customer satisfaction regarding advisory services remained high, especially among small- and medium sized companies and private customers, where satisfaction reached record levels during 2019.

Operating profit increased by 13 per cent. Net interest income increased by 13 per cent or SEK 949m, driven by the less negative interest rate environment following the repo rate hike in the beginning of the year, internal deposit pricing and volume growth. Net fee and commission income decreased by 2 per cent compared to previous year, mainly due to MiFID II related effects, although SEB Kort experienced strong growth in the corporate segment. Total operating expenses increased by 3 per cent, partly driven by increased IT development and regulatory demands. Net expected credit losses were low at SEK 301m with a net expected credit loss level of 4 basis points.

Corporate lending grew above overall market growth, driven by the small- and medium-sized segment. New full-service customers and customer activity resulted in increasing deposits and lending volumes adding up to higher corporate net interest income compared to last year. Corporate lending volumes grew by SEK 15bn since year-end and amounted to SEK 257bn.

Among private customers SEB had a strong focus on the household mortgage business, which resulted in a high new sales market share during the second and third quarter. Mortgage volumes grew by SEK 19bn since year-end and amounted to SEK 501bn. Private Banking experienced yet another quarter with strong growth in underlying business.

In total, lending volumes experienced steady growth, increasing by SEK 36bn to SEK 817bn. The inflow of total deposits continued and volumes grew by SEK 35bn to SEK 456bn (421).


Baltic The division provides full banking and advisory services to private individuals and small and medium-sized corporate customers in Estonia, Latvia and Lithuania.


SEK m 2019 2019 % 2018 % 2019 2018 % 2018

Net interest income 823 802 3 735 12 2 387 2 088 14 2 837Net fee and commission income 413 424 - 2 375 10 1 212 1 072 13 1 449Net financial income 70 69 1 75 - 8 209 201 4 257Net other income 0 - 2 - 76 0 - 4 - 15 - 76 - 21Total operating income 1 305 1 293 1 1 186 10 3 805 3 345 14 4 522Staff costs - 223 - 209 7 - 206 8 - 635 - 594 7 - 811Other expenses - 280 - 271 4 - 258 8 - 813 - 773 5 -1 021Depreciation, amortisation and impairment of tangible and intangible assets - 8 - 7 6 - 14 - 45 - 22 - 40 - 44 - 53Total operating expenses - 511 - 487 5 - 479 7 -1 470 -1 407 5 -1 885Profit before credit losses 794 806 - 1 707 12 2 334 1 938 20 2 637Gains less losses from tangible and intangible assets 1 0 - 1 ### 1 20 - 96 19Net expected credit losses 11 - 33 ### -44 ### - 41 - 10 - 55Operating profit before items affecting comparability 806 773 4 662 22 2 294 1 948 18 2 600Items affecting comparabilityOperating profit 806 773 4 662 22 2 294 1 948 18 2 600


Jan–Sep

1) Quarterly numbers are for end of quarter. Accumulated numbers are average for the period.

Signs of economic slowdown

Continued growth in loan and deposit volumes


Comments on the first nine monthsThe Baltic economies appeared to expand at a slower pace in the third quarter due to weaker industrial production, mainly linked to the deteriorating economic outlook in Western Europe. Private consumption has so far remained resilient, supported by rapid growth in real wages, low unemployment and healthy consumer confidence levels. Looking forward, potential weakening of the global economic outlook is the main concern for domestic businesses in the short term.

In the private segment, the stable growth in lending continued, led by mortgage loans where the margin on new lending remained above the average of the portfolio. Private customers were also more active using cards and payments products. Customers’ use of SEB’s digital service offerings increased, with an increasing number of video meetings and a higher share of sales transacted digitally. Income growth continued in the corporate segment driven mainly by an increase in the

loan portfolio. Total lending volumes grew by 4 per cent in local currency in the first nine months and amounted to SEK 160bn (148). There was steady growth in deposits in both private and corporate segments. Total deposit volumes grew by 5 per cent in local currency and amounted to SEK 151bn (138).

Operating profit increased by 14 per cent in local currency, or by SEK 346m, to SEK 2,294m. Net interest income increased by 11 per cent in local currency mainly due to higher lending volumes, but also due to expanded margins. Net fee and commission income was 10 per cent higher in local currency, mainly from increased customer activity and more card transactions. Operating expenses were 1 per cent higher in local currency, reflecting mainly the salary inflation prevalent across the region. Net expected credit losses were low at SEK 41m with a net expected credit loss level of 3 basis points.


Life The division offers life insurance solutions to private as well as corporate and institutional clients mainly in the Nordic and Baltic countries.


SEK m 2019 2019 % 2018 % 2019 2018 % 2018

Net interest income - 5 - 3 42 - 7 - 34 - 11 - 21 - 48 - 28Net fee and commission income 647 635 2 690 - 6 1 882 2 048 - 8 2 655Net financial income 152 199 - 24 195 - 22 505 835 - 40 953Net other income 14 - 2 - 11 62 0 - 8Total operating income 808 829 - 3 866 - 7 2 438 2 862 - 15 3 572Staff costs - 215 - 206 5 - 219 - 2 - 639 - 807 - 21 -1 017Other expenses - 172 - 178 - 3 - 148 16 - 523 - 438 19 - 615Depreciation, amortisation and impairment of tangible and intangible assets - 5 - 5 0 - 4 42 - 16 - 16 - 3 - 20Total operating expenses - 393 - 390 1 - 371 6 -1 178 -1 261 - 7 -1 653Profit before credit losses 415 439 - 6 496 - 16 1 260 1 601 - 21 1 920Gains less losses from tangible and intangible assetsNet expected credit losses 0 - 1 - 50 0 4 - 1 -2 - 16 - 2Operating profit before items affecting comparability 415 438 - 5 495 - 16 1 259 1 599 - 21 1 917Items affecting comparabilityOperating profit 415 438 - 5 495 - 16 1 259 1 599 - 21 1 917


Jan–Sep


Continued positive inflow in traditional insurance in Sweden

Asset values increased in strong financial markets


Comments on the first nine months Customers’ demand for life insurance products, primarily in occupational pension and traditional life insurance, increased throughout the year. The competition and price pressure continues and it affects our ability to both retain and attract premiums. The financial markets were strong during the year. Customers in the Swedish traditional portfolios continued to benefit from strong investment performance return (9.6 per cent for occupational pension and 8.4 per cent for other insurance).

Total assets in the division’s unit-linked insurance business increased from the beginning of the year by SEK 37bn to SEK 307bn. The increase is due to higher asset values in the financial markets.

Operating profit decreased by 21 per cent to SEK 1,259m year-on-year. The decrease in both income and expenses compared with 2018 was partly explained by the divestment of SEB Pension Denmark in 2018. Excluding this divestment, the nine-month profit decreased by 10 per cent or SEK 133m year-on-year. Net fee and commission income decreased compared to last year due to the divestment effect and margin pressure. Net financial income decreased compared to last year due to lower result in Swedish risk insurance, negative effects in traditional insurance from lower long-term interest rates as well as the divestment. Excluding the divestment, expenses were stable during the year.


Investment Management & Group functions The Investment Management division manages SEB funds and mandates for customers channelled via the other divisions. Group functions consist of business support, Group Treasury, the German run-off operations and other.


SEK m 2019 2019 % 2018 % 2019 2018 % 2018

Net interest income 91 - 85 41 121 - 367 729 - 150 509Net fee and commission income 588 617 - 5 594 - 1 1 733 1 648 5 2 393Net financial income 107 169 - 37 363 - 71 670 707 - 5 1 026Net other income 107 45 135 76 41 246 103 139 91Total operating income 893 747 20 1 075 - 17 2 281 3 188 - 28 4 018Staff costs -1 299 -1 328 - 2 -1 284 1 -3 939 -3 907 1 -4 982Other expenses 1 066 1 167 - 9 780 37 3 253 2 204 48 3 178Depreciation, amortisation and impairment of tangible and intangible assets - 328 - 365 - 10 - 136 141 -1 048 - 408 157 - 549Total operating expenses - 561 - 526 7 - 640 - 12 -1 734 -2 110 - 18 -2 353Profit before credit losses 332 222 50 435 - 24 547 1 077 - 49 1 665Gains less losses from tangible and intangible assets 0 0 - 86 0 - 149 0 0 - 2Net expected credit losses - 22 11 6 - 13 25 - 152 25Operating profit before items affecting comparability 310 233 33 441 - 30 535 1 103 - 52 1 689Items affecting comparability 4 506 - 100 4 506Operating profit 310 233 33 441 - 30 535 5 609 - 90 6 1956 195Cost/Income ratio 0,63 0,70 0,60 0,76 0,66 0,59Number of full time equivalents1) 5 930 5 928 5 588 5 881 5 620 5 647SEB labelled mutual funds, SEK bn 724 703 685 724 685 622Net sales, SEK bn 5 3 3 0 14 15

Jan–Sep


SEB’s assets under management fulfilling SEB’s sustainability criteria increased to SEK 250bn

SEB labelled mutual funds’ asset values increased, driven by inflows and positive markets

Operating profit amounted to SEK 535m

Comments on the first nine monthsInvestment Management: Volatility in the market continued also in the third quarter. Assets under management increased compared to the corresponding period last year driven by net inflows and positive market development. SEB labelled mutual funds amounted to SEK 724bn in total (685) of which SEK 250bn is managed according to SEB’s sustainability criteria.

Operating income increased by 4 per cent year-on-year. Base commissions decreased with 2 per cent in the same period despite increased asset values. As part of the market trend, customer inflows continued to be in lower margin products, with outflows in high margin products. Volumes continued to increase in passively managed funds and products with less exposure to the equity markets. Performance fees increased compared

to the same period last year. Operating profit increased slightly year-on-year.

Group Treasury: Net interest income decreased compared with the first nine months of 2018 since the compensation paid to the business divisions for deposits increased. Net financial income was lower due to the mark-to-market valuation effect on own issued securities in the German run-off operations. In the same unit, net other income was higher, explained by the effect of a repurchase of own issued securities especially in the second quarter 2018.

Business support provides IT operations and development as well as back office services to the divisions. All relevant costs are charged to the divisions to be reflected in their results.

Other consists of Group staff, risk and compliance functions and other various smaller units.


Notes to the financial statements - the SEB Group Note 1 Accounting policiesThis Interim Report is presented in accordance with IAS 34 Interim Financial Reporting. The group’s consolidated accounts have been prepared in accordance with the International Financial Reporting Standards (IFRS) and interpretations of these standards as adopted by the European Commission. The accounting also follows the Annual Accounts Act for Credit Institutions and Securities Companies (1995:1559) and the regulation and general guidelines issued by the Swedish Financial Supervisory Authority: Annual Reports in Credit Institutions and Securities Companies (FFFS 2008:25). In addition, the Supplementary Accounting Rules for Groups (RFR 1) from the Swedish Financial Reporting Board have been applied. The parent company has prepared its accounts in accordance with Swedish Annual Act for Credit Institutions and Securities Companies, the Swedish Financial Supervisory Authority’s Regulations and General Guidelines (FFFS 2008:25) on Annual Reports in Credit Institutions and Securities Companies and the Supplementary Accounting Rules for Legal Entities (RFR 2) issued by the Swedish Financial Reporting Board.

As of 1 January 2019, the group adopted IFRS 16 Leases, which replaces IAS 17 and related interpretations. For more information about the new accounting policies and the transitional effects from adopting IFRS 16, see note 54 in the

Annual Report 2018. There are also some smaller changes to other IFRS standards. IFRIC 23 Uncertainty over Income Tax Treatments has been issued and specifies how to reflect the effects of uncertainty in accounting for income taxes. IAS 28 Interests in Associates and Joint Ventures has been amended so companies should apply IFRS 9 Financial Instruments to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint venture. Amendments have been made to IFRS 9 Financial Instruments regarding prepayment features with negative compensation. IAS 19 Employee Benefits was amended in regards to plan amendment, curtailment or settlement that arises during the reporting period. IAS 23 Borrowing Costs, IAS 12 Income Taxes, IFRS 3 Business Combinations and IFRS 11 Joint Arrangements have been amended within the Annual improvement cycle 2015–2017. The changes have not had a material effect on the financial statements of the group or on capital adequacy and large exposures.

In all other material aspects, the group’s and the parent company’s accounting policies, basis for calculations and presentations are unchanged in comparison with the 2018 Annual Report.

Note 2 Net interest income Q3 Full year

SEK m 2019 2019 % 2018 % 2019 2018 % 2018Interest income1) 10 785 10 540 2 10 068 7 31 274 29 424 6 39 299Interest expense -4 802 -4 848 - 1 -4 749 1 -14 254 -13 618 5 -18 277Net interest income 5 983 5 692 5 5 319 12 17 020 15 807 8 21 0221) Of which interest income calculated using the effective interest method 8 940 8 909 0 8 455 6 26 441 24 300 9 32 907

Q2 Jan–SepQ3


Note 3 Net fee and commission income Q3 Full year

SEK m 2019 2019 % 2018 % 2019 2018 % 2018Issue of securities and advisory services 326 284 15 168 94 843 603 40 1 050Secondary market and derivatives 455 549 - 17 496 - 8 1 528 1 604 - 5 2 179Custody and mutual funds 1 977 1 975 0 2 036 - 3 5 746 6 007 - 4 8 082 Whereof performance fees 11 56 - 81 12 - 12 79 42 89 227

Payments, cards, lending, deposits, guarantees and other 2 843 2 877 - 1 2 628 8 8 426 8 103 4 10 858 Whereof payments and card fees 1 597 1 613 - 1 1 498 7 4 692 4 417 6 5 955 Whereof lending 687 737 - 7 577 19 2 107 1 862 13 2 527Life insurance commissions 435 447 - 3 449 - 3 1 316 1 421 - 7 1 848Fee and commission income 6 035 6 133 - 2 5 777 4 17 858 17 737 1 24 018

Fee and commission expense -1 342 -1 398 - 4 -1 265 6 -4 139 -4 221 - 2 -5 654

Net fee and commission income 4 693 4 735 - 1 4 512 4 13 719 13 517 2 18 364 Whereof Net securities commissions 2 026 2 106 - 4 2 035 0 5 896 6 071 - 3 8 220 Whereof Net payment and card fees 1 019 1 057 - 4 996 2 3 016 2 880 5 3 851 Whereof Net life insurance commissions 310 305 2 330 - 6 896 996 - 10 1 283

Q2 Jan–SepQ3

Fee and commission income by segment

SEK m

Large Corporates & Financial Institutions

Corporate & Private

Customers Baltic Life1)

Investment Management

& Group functions1) Eliminations SEB Group

Jan–Sep 2019Issue of securities and advisory 804 22 13 0 3 843Secondary market and derivatives 1 195 321 15 0 - 3 0 1 528Custody and mutual funds 2 498 1 194 143 124 4 432 -2 644 5 746Payments, cards, lending, deposits, guarantees and other 3 494 3 859 1 540 167 353 - 987 8 426Life insurance commissions 2 429 -1 113 1 316Fee and commission income 7 991 5 396 1 711 2 720 4 784 -4 744 17 858

Jan–Sep 2018Issue of securities and advisory 565 24 12 1 603Secondary market and derivatives 1 239 349 17 0 - 1 0 1 604Custody and mutual funds 2 657 1 338 145 126 4 486 -2 745 6 007Payments, cards, lending, deposits, guarantees and other 3 591 3 710 1 373 160 293 -1 025 8 103Life insurance commissions 2 584 -1 163 1 421Fee and commission income 8 052 5 421 1 548 2 870 4 779 -4 933 17 737

Fee and commission income is disaggregated in major types of service tied to primary geographical markets and operating segments. Revenues from Issue of securities and advisory, Secondary market and derivatives, Payments, cards, lending and deposits are mainly recognised at a point in time. Revenues from Custody and mutual funds and Life insurance commissions are mainly recognised over time.

1) Investment Management & Group functions consists of Investment Management, business support, treasury, staff units and German run-off operations. As previously communicated, on 1 January 2019 SEB reorganised its operations by splitting the division Life & Investment Management into two separate divisions. The Life division is presented on a stand-alone basis. The Investment Management division is combined and reported with group functions as one segment in the interim Report and in addition presented separately in the Fact Book. Earlier periods have been restated in the segment information.


Note 4 Net financial income Q3 Full year

SEK m 2019 2019 % 2018 % 2019 2018 % 2018Equity instruments and related derivatives 586 449 31 449 31 1 874 794 136 637Debt instruments and related derivatives - 407 - 153 165 240 - 619 294 636Currency and related derivatives 950 941 1 684 39 2 987 2 459 21 3 580Other life insurance income, net 150 200 -25 194 -22 503 867 -42 984Other - 84 46 - 61 38 51 154 -67 242Net financial income 1 196 1 482 -19 1 506 -21 4 795 4 567 5 6 079Whereof unrealized valuation changes from counterparty risk and own credit standing in derivatives -160 -102 57 90 -268 38 - 119

The result within Net financial income is presented on different line items based on type of underlying financial instrument.

For the third quarter the effect from structured bonds offered to the public was approximately SEK 215m (Q2 2019: 220) in Equity related derivatives and a corresponding effect in Debt related derivatives SEK 65m (Q2 2019: -10).

Jan–SepQ2 Q3

Note 5 Net expected credit losses Q3 Full year

SEK m 2019 2019 % 2018 % 2019 2018 % 2018Impairment gains or losses - Stage 1 - 4 50 - 30 -87 - 1 - 127 - 117Impairment gains or losses - Stage 2 32 198 -84 - 178 261 - 274 - 134Impairment gains or losses - Stage 3 - 505 - 655 -23 - 157 -1 588 - 180 - 613Impairment gains or losses - 477 - 408 17 - 365 31 -1 329 - 582 128 - 864

Write-offs and recoveriesTotal write-offs - 186 - 413 -55 - 218 -15 - 825 -1 150 -28 -1 768Reversals of allowance for write-offs 129 351 -63 113 14 649 825 -21 1 267Write-offs not previously provided for - 57 - 62 -7 - 105 -46 - 176 - 325 -46 - 501

Recovered from previous write-offs 45 84 -46 47 -3 208 153 36 199Net write-offs - 12 22 - 59 32 - 172 - 302

Net expected credit losses - 489 - 386 27 - 424 15 -1 297 - 753 72 -1 166

Net ECL level, % 0.09 0.07 0.08 0.08 0.05 0.06

Jan–SepQ2 Q3

Exposure and expected credit loss (ECL) allowances by stage, movements in allowances for expected credit losses and loans and expected credit loss allowances by industry are presented in notes 10-12.


Note 6 Items affecting comparability Q3 Full year

SEK m 2019 2019 % 2018 % 2019 2018 % 2018Other income 4 506 -100 4 506Total operating income 4 506 -100 4 506

Items affecting comparability 4 506 -100 4 506

Income tax on IAC 22 -100 22Items affecting comparability after tax 4 528 -100 4 528

Jan–SepQ2 Q3

Items affecting comparability 2018The total income in the income statement from Items affecting comparability was SEK 4,506m before tax and SEK 4,528m after tax.

The table shows the rows in which the Items affecting comparability would have been reported if not reclassified.

SEB Pension (2018 Q2)SEB completed the sale of SEB Pension in Denmark following the approval by the Danish Competition Council, Konkurrencerådet, on 30 May 2018. SEB divested all shares in SEB Pensionsforsikring A/S and SEB Administration A/S (SEB Pension) to Danica Pension Livsforsikringsaktieselskab (Danica), a subsidiary to Danske Bank. The entire business, including employees, customer contracts and systems, transferred from SEB to Danica on 7 June 2018. The in principle tax-exempt capital gain from the transaction amounted to SEK 3,565m.

UC (2018 Q2)On 29 June 2018, the acquisition by the listed Finnish credit information company Asiakastieto Group Plc (Asiakastieto) of UC AB (UC) was finalised. SEB received shares in Asiakastieto, equivalent to 10.2 per cent of the company, and SEK 0.3bn in cash. The transaction resulted in a tax-exempt capital gain of SEK 941m.

Note 7 Pledged assets and obligations 30 Sep 31 Dec 30 Sep

SEK m 2019 2018 2018Pledged assets for own liabilities1) 541 372 510 424 446 037Pledged assets for liabilities to insurance policyholders 333 438 292 402 322 480Other pledged assets2) 100 245 97 713 185 285Pledged assets 975 055 900 539 953 801

Contingent liabilities3) 134 840 136 435 131 724Commitments 660 111 589 032 605 767Obligations 794 951 725 467 737 491

1) Of which collateralised for own issued covered bonds SEK 358,026m (349,800/347,688).2) Of which securities lending SEK 6,918m (15,641/95,475) and pledged but unencumbered bonds SEK 64,032m (58,652/64,211).3) Of which financial guarantees SEK 8,965m (19,932/28,192).


Note 8 Financial assets and liabilities

SEK mCarrying

amount Fair valueCarrying

amount Fair valueCarrying

amount Fair valueLoans1) 2 169 845 2 176 254 1 929 272 1 930 470 2 016 812 2 018 325Debt securities 259 661 259 561 156 128 156 129 216 908 216 909Equity instruments 74 113 74 113 50 434 50 434 56 733 56 733Financial assets for which the customers bear the investment risk 306 827 306 827 269 613 269 613 299 905 299 905Derivatives 170 033 170 033 115 463 115 463 123 163 123 163Other 30 787 30 787 17 194 17 194 30 725 30 725Financial assets 3 011 267 3 017 576 2 538 104 2 539 303 2 744 246 2 745 760

Deposits 1 380 532 1 378 806 1 247 109 1 245 958 1 341 275 1 340 592Financial liabilities for which the customers bear the investment risk 307 605 307 605 270 556 270 556 300 842 300 842Debt securities issued2) 931 713 922 580 715 192 713 983 749 019 743 969Short positions 57 233 57 233 23 144 23 144 53 565 53 565Derivatives 133 830 133 830 96 872 96 872 104 422 104 422Other 28 623 28 625 14 722 14 722 48 239 48 239Financial liabilities 2 839 535 2 828 678 2 367 595 2 365 235 2 597 362 2 591 629

SEB has classified its financial instruments by class taking into account the characteristics of the instruments. The fair value of each class of financial assets and liabilities are compared with its carrying amount. A description of the characteristics of the classes can be found in note 38 in the Annual Report 2018.

30 Sep 2019 31 Dec 2018 30 Sep 2018

1) Loans includes Cash balances at central banks (excluding Cash), Loans to central banks, Loans to credit institutions and Loans to the public. 2) Debt securities issued includes Debt securities issued and Subordinated liabilities (part of Other liablitiies).


Note 9 Assets and liabilities measured at fair value SEK m

Assets

Quoted prices in

active markets

(Level 1)

Valuation technique

using observable

inputs (Level 2)

Valuation technique using non-

observable inputs

(Level 3) Total

Quoted prices in

active markets

(Level 1)

Valuation technique

using observable

inputs (Level 2)

Valuation technique using non-

observable inputs

(Level 3) TotalLoans 210 466 210 466 100 037 100 037Debt securities 88 706 156 087 5 244 798 62 812 76 976 4 139 792Equity instruments 54 239 6 617 13 257 74 113 38 697 3 835 7 902 50 434Financial assets for which the customer bear the investment risk 298 350 7 913 564 306 827 261 056 7 943 614 269 613Derivatives 877 168 669 487 170 033 1 327 113 626 510 115 463Investment in associates1) 97 417 514 256 501 758Total 442 269 549 753 14 729 1 006 750 364 148 302 417 9 531 676 096

LiabilitiesDeposits 55 464 55 464 12 497 12 497Financial liabilities for which the customer bear the investment risk 299 201 7 848 555 307 605 262 029 7 924 603 270 556Liabilities to policyholders - insurance 24 653 1 181 25 834 21 752 95 21 847Debt securities issued 19 981 19 981 18 518 18 518Short positions 44 704 12 461 67 57 233 18 710 4 371 63 23 144Derivatives 650 132 660 520 133 830 2 616 93 783 473 96 872Other financial liabilities at fair value 365 3 360 3 725 18 3 595 3 613Total 369 573 232 956 1 142 603 672 305 125 140 783 1 139 447 0471) Venture capital activities designated at fair value through profit and loss.

Fair value measurement

Level 1: Quoted market prices

Level 2: Valuation techniques with observable inputs

30 Sep 2019

In order to arrive at the fair value of a financial instrument SEB uses different methods; quoted prices in active markets, valuation techniques incorporating observable data and valuation techniques based on internal models. For disclosure purposes, financial instruments carried at fair value are classified in a fair value hierarchy according to the level of market observability of the inputs. Group Risk classifies and continuously reviews the classification of financial instruments in the fair value hierarchy. The valuation process is the same for financial instruments in all levels.

Fair value is generally measured for individual financial instruments, in addition portfolio adjustments are made to cover the credit risk. To reflect counterparty risk and own credit risk in OTC derivatives, adjustments are made based on the net exposure towards each counterpart. These adjustments are calculated on a counterparty level based on estimates of exposure at default, probability of default and recovery rates. Probability of default and recovery rate information is generally sourced from the CDS markets. For counterparties where this information is not available, or considered unreliable due to the nature of the exposure, alternative approaches are taken where the the probability of default is based on generic credit indices for specific industry and/or rating.

The group has an established control environment for the determination of fair values of financial instruments that includes a review, independent from the business, of valuation models and prices. If the validation principles are not adhered to, the Head of Group Finance shall be informed. Exceptions of material and principal importance require approval from the GRMC (Group Risk Measurement Committee) and the ARC (Accounting Reporting Committee).

31 Dec 2018

An active market is one in which transactions occur with sufficient volume and frequency to provide pricing information on an ongoing basis. The objective is to arrive at a price at which a transaction without modification or repackaging would occur in the principal market for the instrument to which SEB has immediate access.

Examples of observable inputs are foreign currency exchange rates, binding securities price quotations, market interest rates (Stibor, Libor, etc.), volatilities implied from observable option prices for the same term and actual transactions with one or more external counterparts executed by SEB. An input can transfer from being observable to being unobservable during the holding period due to e.g. illiquidity of the instrument. Examples of Level 2 financial instruments are most OTC derivatives such as options and interest rate swaps based on the Libor swap rate or a foreign-denominated yield curve. Other examples are instruments for which SEB recently entered into transactions with third parties and instruments for which SEB interpolates between observable variables.

The objective of the fair value measurement is to arrive at the price at which an orderly transaction would take place between market participants at the measurement date under current market conditions.

Examples of Level 1 financial instruments are listed equity securities, debt securities, and exchange-traded derivatives. Instruments traded in an active market for which one or more market participants provide a binding price quotation on the balance sheet date are also examples of Level 1 financial instruments.

Valuations in Level 1 are determined by reference to unadjusted quoted market prices for identical instruments in active markets where the quoted prices are readily available and the prices represent actual and regularly occurring market transactions on an arm’s length basis.

In order to arrive at the fair value of investment properties a market participant’s ability to generate economic benefit by using the asset in its highest and best use are taken into account. The highest and best use takes into account the use of the asset that is physically possible, legally permissible and financially feasible. The current use of the investment properties in SEB is in accordance with the highest and best use. The valuation of investment properties is described in the accounting policies in Annual Report note 1. The valuation of the investment properties is performed semi-annually, they are presented and approved by the board in each real estate company. The valuation principles used in all entities are in accordance with regulations provided by the local Financial Supervisory Authorities (FSA) which is in accordance with international valuation principles and in accordance with IFRS.

When valuing financial liabilities at fair value SEB's own credit standing is reflected.

In Level 2 valuation techniques, all significant inputs to the valuation models are observable either directly or indirectly. Level 2 valuation techniques include using discounted cash flows, option pricing models, recent transactions and the price of another instrument that is substantially the same.


Note 9, continued. Assets and liabilities measured at fair value Level 3: Valuation techniques with significant unobservable inputs

Significant transfers and reclassifications between levels

Changes in level 3, SEK m

Closing balance31 Dec

2018Reclassi-

fication

Gain/loss in Income

statement1)

Gain/loss in Other

compre-hensive income Purchases Sales

Settle-ments

Transfersinto

Level 3

Transfers out of

Level 3

Exchange rate

differences

Closing balance30 Sep

2019AssetsDebt securities 4 1 5Equity instruments 7 902 1 552 2 398 -1 014 2 281 138 13 257Financial assets for which the customer bear the investment risk 614 30 4 -199 90 25 564Derivatives 510 -60 -3 40 487Investment in associates 501 -30 70 -126 2 417Total 9 531 1492 2472 -1342 40 2371 165 14 729

LiabilitiesFinancial liabilities for which the customer bear the investment risk 603 32 -195 90 25 555Short positions 63 2 2 67Derivatives 473 -57 104 520Total 1 139 -23 -195 104 90 27 1 1421) Fair value gains and losses recognised in the income statement are included in Net financial income and Net other income.

Sensitivity of Level 3 assets and liabilities to unobservable inputs

SEK m Assets Liabilities Net Sensitivity Assets Liabilities Net SensitivityDerivative instruments1) 2) 4) 491 -520 -29 35 510 -473 37 45

Equity instruments3) 6) 3 323 -67 3 256 654 2 584 -63 2 521 50510 053 10 053 1 288 5 576 5 576 697

30 Sep 2019 31 Dec 2018

The table below illustrates the potential Profit or Loss impact of the relative uncertainty in the fair value of assets and liabilities that for their valuation are dependent on unobservable inputs. The sensitivity to unobservable inputs is assessed by altering the assumptions to the valuation techniques, illustrated below by changes in index-linked swap spreads, implied volatilities, credit spreads or comparator multiples. It is unlikely that all unobservable inputs would be simultaneously at the extremes of their ranges of reasonably possible alternatives.

7) The sensitivity show changes in the value of the insurance holdings which do not at all times affect the P&L of the Group since any surplus in the traditional life portfolios are consumed first.6) Sensitivity from a shift of investment properties/real estate funds/infrastructure/infrastructure funds market values of 10 per cent (10).

Insurance holdings - Financial instruments4) 5) 7)

5) Sensitivity analysis is based on a shift in private equity of 20 per cent (20), structured credits 10 per cent (10) and derivative market values of 10 per cent (10).

3) Valuation is estimated in a range of reasonable outcomes. Sensitivity analysis is based on 20 per cent (20) shift in market values.4) Shift in implied volatility by 10 percentage points (10).

1) Sensitivity from a shift of inflation linked swap spreads by 16 basis points (16) and implied volatilities by 5 percentage points (5).2) Sensitivity from a shift of swap spreads by 5 basis points (5).

Transfers between levels may occur when there are indications that market conditions have changed, e.g. a change in liquidity. The Valuation/Pricing committee of each relevant division decides on material shifts between levels. At the end of the third quarter 2019 Equity instruments (Fund assets) within the insurance holdings at the amount of SEK 2.3bn have been transferred from level 2 into level 3. The transfers are a result of calibration of the classification methodology, in particular with regards to investment funds and other collective investment vehicles. The reclassification generates an increase of the sensitivity of Level 3 assets and liabilities to unobservable inputs of SEK 293m. The largest open market risk within Level 3 financial instruments remains in the traditional life insurance investment portfolios within the insurance business.

Level 3 valuation techniques incorporate significant inputs that are unobservable. These techniques are generally based on extrapolating from observable inputs for similar instruments, analysing historical data or other analytical techniques. Examples of Level 3 financial instruments are more complex OTC derivatives, long dated options for which the volatility is extrapolated or derivatives that depend on an unobservable correlation. Other examples are instruments for which there is currently no active market or binding quotes, such as unlisted equity instruments, private equity holdings and investment properties.If the fair value of financial instruments includes more than one unobservable input, the unobservable inputs are aggregated in order to determine the classification of the entire instrument. The level in the fair value hierarchy within which a financial instrument is classified is determined on the basis of the lowest level of input that is significant to the fair value in its entirety.


Note 10 Exposure and expected credit loss (ECL) allowances by stage30 Sep 31 Dec 30 Sep

SEK m 2019 2018 2018

Stage 1 (12-month ECL)Debt securities 14 864 16 337 15 734Loans1) 1 640 097 1 552 954 1 571 239Financial guarantees and Loan commitments 644 136 602 884 568 578Gross carrying amounts/Nominal amounts Stage 1 2 299 098 2 172 175 2 155 551

Debt securities -1 -1 -1Loans1) -669 -643 -668Financial guarantees and Loan commitments -202 -195 -185ECL allowances Stage 1 -872 -838 -854

Debt securities 14 863 16 336 15 733Loans1) 1 639 428 1 552 311 1 570 571Financial guarantees and Loan commitments 643 935 602 689 568 394Carrying amounts/Net amounts Stage 1 2 298 226 2 171 337 2 154 698

Stage 2 (lifetime ECL)Loans1)2) 76 521 70 125 72 603Financial guarantees and Loan commitments 16 168 16 712 17 285Gross carrying amounts/Nominal amounts Stage 2 92 689 86 837 89 888

Loans1)2) -1 232 -1 364 -1 526Financial guarantees and Loan commitments -173 -240 -233ECL allowances Stage 2 -1 405 -1 605 -1 760

Loans1)2) 75 290 68 761 71 077Financial guarantees and Loan commitments 15 995 16 472 17 052Carrying amounts/Net amounts Stage 2 91 284 85 233 88 128

Stage 3 (credit impaired/lifetime ECL)Loans1)3) 11 242 8 158 8 330Financial guarantees and Loan commitments 610 242 348Gross carrying amounts/Nominal amounts Stage 3 11 851 8 400 8 677

Loans1)3) -4 381 -3 331 -3 326Financial guarantees and Loan commitments -103 -38 -138ECL allowances Stage 3 -4 484 -3 370 -3 464

Loans1)3) 6 861 4 827 5 004Financial guarantees and Loan commitments 507 203 210Carrying amounts/Net amounts Stage 3 7 367 5 030 5 214

The note continues on the next page


Note 10, continued. Exposure and expected credit loss (ECL) allowances by stage 30 Sep 31 Dec 30 Sep

SEK m 2019 2018 2018

TotalDebt securities 14 864 16 337 15 734Loans1)2)3) 1 727 860 1 631 237 1 652 172Financial guarantees and Loan commitments 660 914 619 838 586 211Gross carrying amounts/Nominal amounts 2 403 638 2 267 412 2 254 116

Debt securities -1 -1 -1Loans1)2)3) -6 281 -5 338 -5 520Financial guarantees and Loan commitments -477 -474 -556ECL allowances -6 760 -5 813 -6 077

Debt securities 14 863 16 336 15 733Loans1)2)3) 1 721 578 1 625 899 1 646 652Financial guarantees and Loan commitments 660 436 619 365 585 655Carrying amounts/Net amounts 2 396 878 2 261 600 2 248 040

Stage 3 loans / Total loans, gross, % 0.65 0.50 0.50Stage 3 loans / Total loans, net, % 0.40 0.30 0.30ECL coverage ratio Stage 1, % 0.04 0.04 0.04ECL coverage ratio Stage 2, % 1.52 1.85 1.96ECL coverage ratio Stage 3, % 37.83 40.11 39.92ECL coverage ratio, % 0.28 0.26 0.27

2) Whereof gross carrying amounts SEK 1,507m (1,169/1,318) and ECL allowances SEK 2m (2/1) under Lifetime ECLs -simplified approach for trade receivables.

The table shows gross carrying amounts for exposures on balance and nominal amounts for exposures off-balance divided by stage as a mean to put ECL allowances in context to overall exposure levels. For trade receivables a simplified approach based on past-due information is used to calculate loss allowances.

3) Whereof gross carrying amounts SEK 2,225m (1,281/0) and ECL allowances SEK 909m (349/0) for Purchased or Originated Credit Impaired loans.

1) Excluding demand deposits credit institutions and including trade and client receivables presented as other assets.


Note 11 Movements in allowances for expected credit losses (ECL)

SEK m

Stage 1 (12-month

ECL)Stage 2

(lifetime ECL)

Stage 3 (credit

impaired/lifetime

ECL) Total

Loans and Debt securitiesECL allowance as of 31 December 2018 643 1 364 3 331 5 339New and derecognised financial assets, net 264 -44 -81 140Changes due to change in credit risk -255 -137 1 604 1 211Changes due to modifications 9 0 10Changes due to methodology change -5 -7 2 -11Decreases in ECL allowances due to write-offs -649 -649Exchange rate differences 22 47 174 244ECL allowance as of 30 September 2019 670 1 232 4 381 6 282

Financial guarantees and Loan commitmentsECL allowance as of 31 December 2018 195 240 38 474New and derecognised financial assets, net 47 -72 -17 -42Changes due to change in credit risk -49 -7 81 24Changes due to modifications 0 0Changes due to methodology change 0 -2 -1 -3Exchange rate differences 10 13 1 24ECL allowance as of 30 September 2019 202 173 103 477

Total Loans, Debt securities, Financial guarantees and Loan commitmentsECL allowance as of 31 December 2018 838 1 605 3 370 5 813New and derecognised financial assets, net 311 -116 -97 98Changes due to change in credit risk -305 -145 1 684 1 235Changes due to modifications 9 0 10Changes due to methodology change -5 -9 1 -13Decreases in ECL allowances due to write-offs -649 -649Exchange rate differences 32 60 175 268ECL allowance as of 30 September 2019 872 1 405 4 484 6 760


Note 12 Loans and expected credit loss (ECL) allowances by industry Net carrying

amount

SEK m

Stage 1 (12-month

ECL)

Stage 2 (lifetime

ECL)

Stage 3 (credit

impaired/lifetime ECL) Total

Stage 1 (12-month

ECL)

Stage 2 (lifetime

ECL)

Stage 3 (credit

impaired/lifetime ECL) Total Total

30 Sep 2019Banks 74 027 373 7 74 406 -2 -1 -2 -5 74 402

Finance and insurance 126 885 933 63 127 880 -26 -11 -6 -43 127 838Wholesale and retail 77 727 3 521 1 201 82 450 -49 -60 -456 -565 81 885Transportation 37 641 628 96 38 365 -17 -5 -67 -89 38 276Shipping 57 317 2 113 1 868 61 298 -24 -17 -643 -684 60 615Business and household services 142 647 7 716 836 151 199 -155 -248 -362 -765 150 433Construction 12 064 1 329 181 13 574 -8 -11 -61 -79 13 494Manufacturing 97 420 5 068 1 850 104 339 -67 -159 -761 -987 103 352Agriculture, forestry and fishing 22 932 1 559 202 24 693 -11 -9 -46 -66 24 627Mining, oil and gas extraction 20 653 6 715 1 547 28 916 -25 -132 -551 -709 28 207Electricity, gas and water supply 44 961 902 217 46 080 -17 -65 -84 -166 45 914Other 39 962 3 673 263 43 898 -21 -98 -73 -193 43 705Corporates 680 210 34 157 8 325 722 692 -421 -817 -3 108 -4 346 718 346

Commercial real estate management 150 866 3 187 421 154 473 -16 -18 -141 -174 154 299Residential real estate management 108 077 1 433 47 109 557 -8 -1 -2 -11 109 546Real Estate Management 258 943 4 620 467 264 030 -24 -18 -142 -185 263 845

Housing co-operative associations 52 165 7 867 4 60 036 0 0 -2 -3 60 034

Public Administration 16 476 960 3 17 439 -1 -3 -1 -5 17 434

Household mortgages 518 806 23 166 1 236 543 208 -50 -138 -382 -570 542 638Other 39 469 5 380 1 199 46 048 -171 -254 -744 -1 169 44 879Households 558 276 28 545 2 435 589 256 -221 -392 -1 126 -1 739 587 517

TOTAL 1 640 097 76 521 11 241 1 727 859 -669 -1 231 -4 381 -6 281 1 721 578

31 Dec 20181)

Banks 97 795 900 0 98 695 -2 -2 0 -4 98 691

Finance and insurance 97 505 660 15 98 180 -17 -4 -11 -32 98 148Wholesale and retail 77 427 3 120 550 81 097 -42 -82 -181 -306 80 792Transportation 34 437 691 105 35 232 -14 -7 -77 -97 35 135Shipping 50 121 963 1 694 52 779 -18 -5 -407 -430 52 349Business and household services 140 094 7 035 862 147 991 -143 -227 -351 -721 147 271Construction 9 981 1 281 223 11 486 -7 -14 -47 -68 11 418Manufacturing 90 701 3 642 730 95 073 -82 -73 -529 -683 94 390Agriculture, forestry and fishing 19 859 1 258 128 21 245 -8 -7 -40 -55 21 190Mining, oil and gas extraction 14 615 6 046 530 21 191 -30 -421 -97 -548 20 644Electricity, gas and water supply 38 990 761 2 39 752 -15 -44 0 -60 39 692Other 44 385 2 857 115 47 357 -57 -72 -237 -366 46 991Corporates 618 115 28 314 4 955 651 384 -433 -956 -1 977 -3 365 648 019

Commercial real estate management 142 857 2 750 561 146 169 -17 -19 -188 -224 145 945Residential real estate management 90 985 824 87 91 897 -5 -1 -31 -37 91 860Real Estate Management 233 843 3 574 648 238 065 -23 -19 -219 -261 237 805

Housing co-operative associations 54 807 8 695 0 63 502 -1 0 -2 -4 63 498

Public Administration 13 013 280 2 13 296 -1 -4 -2 -7 13 289

Household mortgages 497 351 23 132 1 374 521 856 -54 -148 -422 -623 521 233Other 38 029 5 230 1 179 44 438 -129 -236 -710 -1 074 43 364Households 535 381 28 362 2 552 566 295 -182 -383 -1 132 -1 698 564 597

TOTAL 1 552 954 70 125 8 158 1 631 237 -643 -1 364 -3 331 -5 338 1 625 899

Gross carrying amounts ECL allowances

Excluding demand deposits credit institutions and including trade and client receivables presented as other assets.

1) Household mortgage lending to the customer segment sole proprietors has been reclassified. As a result the year-end 2018 reported household lending of SEK 528bn has been adjusted to SEK 565bn and the lending volumes in other segments have been reduced accordingly.


SEB consolidated situation

Note 13 Capital adequacy analysis

SEK m 30 Sep 2019 31 Dec 2018 30 Sep 2018

Own fundsCommon Equity Tier 1 capital 127 090 125 857 124 699Tier 1 capital 143 773 141 108 139 848Total own funds 162 552 159 331 158 282

Own funds requirementRisk exposure amount 777 243 716 498 631 958Expressed as own funds requirement 62 179 57 320 50 557Common Equity Tier 1 capital ratio 16.4% 17.6% 19.7%Tier 1 capital ratio 18.5% 19.7% 22.1%Total capital ratio 20.9% 22.2% 25.0%Own funds in relation to own funds requirement 2.61 2.78 3.13

Regulatory Common Equity Tier 1 capital requirement including buffer 11.5% 11.2% 11.0% of which capital conservation buffer requirement 2.5% 2.5% 2.5% of which systemic risk buffer requirement 3.0% 3.0% 3.0% of which countercyclical capital buffer requirement 1.5% 1.2% 1.0%

Common Equity Tier 1 capital available to meet buffer 1) 11.9% 13.1% 15.2%

Leverage ratioExposure measure for leverage ratio calculation 3 230 206 2 773 608 2 914 154 of which on balance sheet items 2 691 091 2 311 250 2 475 559 of which off balance sheet items 539 115 462 358 438 595Leverage ratio 4.5% 5.1% 4.8%

1) CET1 ratio less minimum capital requirement of 4.5% excluding buffers.


Note 14 Own funds

SEK m 30 Sep 2019 31 Dec 2018 30 Sep 2018

Shareholders equity according to balance sheet 1) 146 088 148 789 145 364Deductions related to the consolidated situation and other foreseeable charges -10 307 -14 227 -9 845Common Equity Tier 1 capital before regulatory adjustments 2) 135 781 134 562 135 519

Additional value adjustments -1 267 -868 -726Intangible assets -6 579 -6 467 -6 458Fair value reserves related to gains or losses on cash flow hedges 44 -313 -519Negative amounts resulting from the calculation of expected loss amounts -733 -78Gains or losses on liabilities valued at fair value resulting from changes in own credit standing 26 8 196Defined-benefit pension fund assets -816 -3 114Direct and indirect holdings of own CET1 instruments -181 -172 -198Total regulatory adjustments to Common Equity Tier 1 -8 690 -8 705 -10 820

Common Equity Tier 1 capital 127 090 125 857 124 699

Additional Tier 1 instruments 16 682 15 251 15 149Tier 1 capital 143 773 141 108 139 848

Tier 2 instruments 19 802 18 987 19 095Net provisioning amount for IRB-reported exposures 177 436 539Holdings of Tier 2 instruments in financial sector entities -1 200 -1 200 -1 200Tier 2 capital 18 779 18 222 18 434

Total own funds 162 552 159 331 158 282

1) The Swedish Financial Supervisory Authority has approved SEB’s application to use the net profit in measuring own funds on condition that the responsible auditors have reviewed the surplus, that the surplus is calculated in accordance with applicable accounting frameworks, that predictable costs and dividends have been deducted in accordance with EU regulation No 575/2013 and that the calculation was made in accordance with EU regulation No 241/2014.

2) The Common Equity Tier 1 capital is presented on a consolidated basis, and differs from total equity according to IFRS. The insurance business contribution to equity is excluded and there is a dividend deduction calculated according to Regulation (EU) No 575/2013 (CRR).


Note 15 Risk exposure amount SEK m

Credit risk IRB approachRisk exposure

amountOwn funds

requirement 1) Risk exposure

amountOwn funds

requirement 1) Risk exposure

amountOwn funds

requirement 1)

Exposures to central governments or central banks 12 780 1 022 11 602 928 11 129 890Exposures to institutions 55 080 4 406 51 033 4 083 53 495 4 280Exposures to corporates 376 507 30 121 342 713 27 417 337 835 27 027Retail exposures 68 029 5 442 63 171 5 054 63 276 5 062 of which secured by immovable property 39 489 3 159 36 720 2 938 36 701 2 936 of which retail SME 7 716 617 7 027 562 7 422 594 of which other retail exposures 20 824 1 666 19 424 1 554 19 153 1 532Securitisation positions 1 189 95 987 79 1 012 81Total IRB approach 513 585 41 087 469 506 37 560 466 748 37 340

Credit risk standardised approachExposures to central governments or central banks 264 21 2 241 179 2 018 161Exposures to institutions 873 70 649 52 649 52Exposures to corporates 14 395 1 152 14 539 1 163 15 482 1 239Retail exposures 13 522 1 082 13 310 1 065 13 079 1 046Exposures secured by mortgages on immovable property 2 422 194 2 184 175 2 573 206Exposures in default 93 7 168 13 165 13Exposures associated with particularly high risk 869 70 761 61 694 56Exposures in the form of collective investment undertakings (CIU) 55 4 45 4 47 4Equity exposures 3 592 287 4 045 324 2 945 236Other items 12 173 974 5 885 471 8 473 678Total standardised approach 48 257 3 861 43 827 3 506 46 126 3 690

Market riskTrading book exposures where internal models are applied 27 715 2 217 25 020 2 002 27 550 2 204Trading book exposures applying standardised approaches 13 013 1 041 7 711 617 12 595 1 008Foreign exchange rate risk 3 111 249 2 889 231 3 079 246Total market risk 43 839 3 507 35 620 2 850 43 223 3 458

Other own funds requirementsOperational risk advanced measurement approach 47 540 3 803 47 151 3 772 47 205 3 776Settlement risk 9 1 0 0Credit value adjustment 8 212 657 7 605 608 7 670 614Investment in insurance business 16 633 1 331 16 633 1 331 16 633 1 331Other exposures 3 769 302 4 556 365 4 353 348Additional risk exposure amount2) 95 408 7 633 91 591 7 327Total other own funds requirements 171 562 13 725 167 545 13 404 75 861 6 069

Total 777 243 62 179 716 498 57 320 631 958 50 557

1) Own funds requirement 8% of risk exposure amount according to Regulation (EU) No 575/2013 (CRR).

30 Sep 2018 30 Sep 2019 31 Dec 2018

2) Additional risk exposure amount according to Article 458, Regulation (EU) No 575/2013 (CRR), for risk-weight floors in the Swedish mortgage portfolio.

Note 16 Average risk-weight The following table summarises average risk-weights (risk exposure amount divided by exposure at default, EAD) for exposures, where the risk exposure amount is calculated according to the internal ratings based (IRB) approach. Repos and securities lending transactions are excluded from the

analysis, since they carry low risk-weights, and can vary considerably in volume, thus making numbers less comparable.

IRB reported credit exposures (less repos and securities lending)Average risk-weight 30 Sep 2019 31 Dec 2018 30 Sep 2018

Exposures to central governments or central banks 3.0% 3.0% 2.6%Exposures to institutions 24.3% 25.4% 25.7%Exposures to corporates 30.8% 31.0% 31.1%Retail exposures 10.5% 10.2% 10.3% of which secured by immovable property 6.9% 6.8% 6.8% of which retail SME 59.2% 57.7% 58.5% of which other retail exposures 32.0% 30.8% 30.3%Securitisation positions 9.5% 9.3% 10.3%


Skandinaviska Enskilda Banken AB (publ) – parent company

Income statement In accordance with FSA regulations Q3 Q2 Q3 Full yearSEK m 2019 2019 % 2018 % 2019 2018 % 2018Interest income1) 8 992 8 753 3 8 189 10 26 082 24 016 9 32 548Leasing income 1 462 1 448 1 1 413 3 4 334 4 240 2 5 656Interest expense1) -4 387 -4 370 0 -4 115 7 -13 004 -11 801 10 -16 344Dividends 527 1 195 -56 844 -38 4 420 8 454 -48 9 130Fee and commission income 3 382 3 416 -1 3 132 8 9 959 9 763 2 13 281Fee and commission expense - 743 - 791 -6 - 727 2 -2 333 -2 393 -3 -3 218Net financial income 800 1 276 -37 983 -19 3 655 2 980 23 4 574Other income 639 183 184 1 221 1 694 -28 1 770Total operating income 10 671 11 111 -4 9 903 8 34 335 36 952 -7 47 398

Administrative expenses -3 917 -4 040 -3 -3 775 4 -11 999 -11 349 6 -15 263

Depreciation, amortisation and impairment of tangible and intangible assets -1 447 -1 430 1 -1 375 5 -4 286 -4 126 4 -5 512Total operating expenses -5 364 -5 470 -2 -5 150 4 -16 285 -15 476 5 -20 775

Profit before credit losses 5 307 5 641 -6 4 753 12 18 050 21 476 -16 26 623

Net expected credit losses -458 -328 40 - 371 24 -1 143 - 724 58 -1 020Impairment of financial assets - 426 - 458 -7 - 741 -2 800 -74 -2 928Operating profit 4 424 5 314 -17 3 924 13 16 166 17 953 -10 22 675

Appropriations 409 445 -8 570 -28 1 174 1 155 2 2 716Income tax expense - 808 - 857 -6 -1 111 -27 -2 531 -2 424 4 -3 789Other taxes - 5 1 22 - 4 - 20 118NET PROFIT 4 019 4 903 -18 3 406 18 14 805 16 664 -11 21 720

Jan–Sep

1) The presentation between Interest Income and Interest Expense of financing costs has been aligned with the group presentation. The movement amounted to SEK 1,622m in Q3 2018, SEK 3,761m for the period Jan-Sep 2018 and SEK 5,523m for the full year 2018.

Statement of comprehensive income

Q3 Q2 Q3 Full yearSEK m 2019 2019 % 2018 % 2019 2018 % 2018NET PROFIT 4 019 4 903 -18 3 406 18 14 805 16 664 -11 21 720

Cash flow hedges - 28 - 155 -82 - 114 -75 - 356 - 559 -36 - 880Translation of foreign operations - 1 7 2 36 47 -24 - 11Items that may subsequently be reclassified to the income statement: - 29 - 148 -80 - 112 -74 - 321 - 512 -37 - 891

OTHER COMPREHENSIVE INCOME - 29 - 148 -80 - 112 -74 - 321 - 512 -37 - 891

TOTAL COMPREHENSIVE INCOME 3 990 4 755 -16 3 294 21 14 484 12 747 14 20 829

Jan–Sep


Balance sheet, condensed 30 Sep 31 Dec 30 Sep

SEK m 2019 2018 2018Cash and cash balances with central banks 233 311 164 081 248 224Loans to central banks 3 647 29 665 13 463Loans to credit institutions 102 509 90 668 125 904Loans to the public 1 613 290 1 410 687 1 427 115Debt securities 229 582 119 227 178 796Equity instruments 57 717 36 993 43 150Derivatives 166 116 113 282 120 902Other assets 129 723 113 672 126 493TOTAL ASSETS 2 535 896 2 078 275 2 284 047

Deposits from central banks and credit institutions 228 041 160 022 176 100Deposits and borrowings from the public1) 1 015 845 927 224 1 035 677Debt securities issued 893 960 680 396 711 655Short positions 57 233 23 144 53 565Derivatives 130 727 95 269 103 399Other financial liabilities 3 725 3 613 4 417Other liabilities 72 929 55 059 71 066Untaxed reserves 20 855 20 855 21 423Equity 112 582 112 695 106 745TOTAL LIABILITIES, UNTAXED RESERVES AND EQUITY 2 535 896 2 078 275 2 284 047

1) Private and SME deposits covered by deposit guarantee 208 747 202 823 200 155 Private and SME deposits not covered by deposit guarantee 111 098 154 785 150 624 All other deposits 696 000 569 616 684 898 Total deposits from the public 1 015 845 927 224 1 035 677

Pledged assets and obligations 30 Sep 31 Dec 30 Sep

SEK m 2019 2018 2018Pledged assets for own liabilities 529 621 489 784 419 832Other pledged assets 93 327 82 072 168 239Pledged assets 622 947 571 856 588 071

Contingent liabilities 143 530 134 317 134 804Commitments 597 976 535 168 549 879Obligations 741 506 669 486 684 684


Capital adequacy

SEK m 30 Sep 2019 31 Dec 2018 30 Sep 2018

Own fundsCommon Equity Tier 1 capital 112 454 108 336 107 577Tier 1 capital 129 136 123 587 122 726Total own funds 147 738 141 904 141 319

Own funds requirementRisk exposure amount 695 001 640 442 557 621Expressed as own funds requirement 55 600 51 235 44 610Common Equity Tier 1 capital ratio 16.2% 16.9% 19.3%Tier 1 capital ratio 18.6% 19.3% 22.0%Total capital ratio 21.3% 22.2% 25.3%Own funds in relation to capital requirement 2.66 2.77 3.17

Regulatory Common Equity Tier 1 capital requirement including buffers 8.6% 8.3% 8.1% of which capital conservation buffer requirement 2.5% 2.5% 2.5% of which countercyclical capital buffer requirement 1.6% 1.3% 1.1%

Common Equity Tier 1 capital available to meet buffers 1) 11.7% 12.4% 14.8%

1) CET1 ratio less minimum capital requirement of 4.5% excluding buffers.


Signature of the President

The President declares that the Interim Report for the period 1 January 2019 through 30 September 2019 provides a fair overview of the parent company’s and the group’s operations, their financial position and results and describes material risks and uncertainties facing the parent company and the group.

Stockholm, 23 October 2019 Johan Torgeby President and Chief Executive Officer

Auditor’s review report

To the Board of Directors in Skandinaviska Enskilda Banken AB (publ), 502032-9081

Introduction We have reviewed the nine-month interim financial statements for Skandinaviska Enskilda Banken AB (publ) as at 30 September 2019 and for the nine-month period ending as at this date. The Board of Directors and the Chief Executive Officer are responsible for the preparation and presentation of these interim financial statements in accordance with IAS 34 and the Annual Accounts Act for Credit Institutions and Securities Companies. Our responsibility is to express a conclusion on these interim financial statements based on our review. Scope of review We have conducted our review in accordance with the International Standard on Review Engagements ISRE 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily to persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review differs from and is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with IAS 34 and the Annual Accounts Act for Credit Institutions and Securities Companies regarding the Group, and in accordance with the Annual Accounts Act for Credit Institutions and Securities Companies regarding the parent company. Stockholm, 23 October 2019 Ernst & Young AB Hamish Mabon Authorised Public Accountant


Contacts and calendar Results presentation and webcasts The presentation of the results will be held at 9.15 am, Swedish time, on 23 October 2019, at Kungsträdgårdsgatan 8 with the President and CEO, Johan Torgeby, and the Finance Director, Masih Yazdi, (in English). The presentation can be followed live on sebgroup.com/ir. A replay will be available afterwards. Telephone conference The telephone conference at 2.15 pm, Swedish time, on 23 October 2019 with the Finance Director, Masih Yazdi, and the Head of Investor Relations, Christoffer Geijer, can be accessed by telephone, +44 (0)2071 928 000. Please quote conference id: 8574727and call at least 10 minutes in advance. A replay of the conference call will be available on sebgroup.com/ir.

Further information is available from: Masih Yazdi, Finance Director Tel: +46 771 621 000 Christoffer Geijer, Head of Investor Relations Tel: +46 70 762 10 06 Frank Hojem, Head of Corporate Communication Tel: +46 70 763 99 47 Skandinaviska Enskilda Banken AB (publ.) SE-106 40 Stockholm, Sweden Tel: +46 771 621 000 sebgroup.com Corporate organisation number: 502032-9081 Further financial information is available in SEB’s Fact Book and in the additional Pillar 3 disclosures which are published quarterly on sebgroup.com/ir.

Financial information calendar 2020 29 January 2020 Annual Accounts 2019 The silent period starts 1 January 2020 2 March 2020 Annual Report 2019 published on sebgroup.com 23 March 2020 Annual General Meeting 29 April 2020 Interim Report January-March 2020 The silent period starts 1 April 2020 15 July 2020 Interim Report January-June 2020 The silent period starts 1 July 2020 22 October 2020 Interim Report January-September 2020 The silent period starts 1 October 2020 The financial information calendar for 2021 will be published in conjunction with the Interim Report for January-September 2020.


STOCKHOLM 3 MAY 2011

Definitions - Alternative Performance Measures1)

Items affecting comparability To facilitate the comparison of operating profit between current and previous periods, items with significant impact that management considers affect the comparability or are relevant for the understanding of the financial result, are identified and presented separately, for example impairment of goodwill, restructuring, gains and losses from divestments and other income or costs that are not recurring. Operating profit Total profit before tax. Operating profit before items affecting comparability Total profit before items affecting comparability and tax. Net profit Total profit after tax. Return on equity Net profit attributable to shareholders in relation to average2)

shareholders’ equity. Return on equity excluding items affecting comparability Net profit attributable to shareholders, excluding items affecting comparability and their related tax effect, in relation to average2) shareholders’ equity. Return on business equity Operating profit by division, reduced by a standard tax rate, in relation to the divisions’ average2) business equity (allocated capital). Return on total assets Net profit attributable to shareholders, in relation to average2)

total assets. Return on risk exposure amount Net profit attributable to shareholders in relation to average2)

risk exposure amount. 1) Alternative Performance Measures, APMs, are financial measures of historical or future financial performance, financial position, or cash flows, other than those defined in the applicable financial reporting framework (IFRS) or in the EU Capital Requirements Regulation and Directive CRR/CRD IV. APMs are used by SEB when relevant to assess and describe SEB’s financial situation and provide additional relevant information and tools to enable analysis of SEB’s performance. APMs on basic earnings per share, diluted earnings per share, net worth per share, equity per share, return on equity, return on total assets and return on risk exposure amount provide relevant information on the performance in relation to different investment measurements. The cost/income ratio provides information on SEB’s cost efficiency. APMs related to lending provide information on provisions in relation to credit risk. All these measures may not be comparable to similarly titled measures used by other companies. 2) Average year-to-date, calculated on month-end figures. 3) Average, calculated on a daily basis.

Cost/income ratio Total operating expenses in relation to total operating income. Basic earnings per share Net profit attributable to shareholders in relation to the weighted average3) number of shares outstanding before dilution. Diluted earnings per share Net profit attributable to shareholders in relation to the weighted average3) diluted number of shares. The calculated dilution is based on the estimated economic value of the long-term equity-based programmes. Net worth per share The total of shareholders’ equity, the equity portion of any surplus values in the holdings of debt securities and the surplus value in life insurance operations in relation to the number of shares outstanding. Equity per share Shareholders’ equity in relation to the number of shares outstanding. Core gap ratio Structural liquidity risk measure defined as total liabilities deemed to mature beyond one year in relation to total assets deemed to mature beyond one year. Expected credit losses, ECL Probability-weighted credit losses with the respective risk of a default. ECL allowances The allowance for expected credit losses on financial assets, contract assets, loan commitments and financial guarantee contracts.


Net ECL level Net credit impairments in relation to the opening balance of the year of debt securities, loans to the public and loans to credit institutions measured at amortised cost, financial guarantees and loan commitments, net of ECL allowances. ECL coverage ratio ECL allowances in relation to underlying gross carrying amounts for loans and debt securities as well as nominal amounts of financial guarantees and loan commitments. Stage 3 loans / Total loans, gross Gross carrying amount for stage 3 loans (credit-impaired loans) in relation to gross carrying amount for total loans measured at amortised cost (excluding demand deposits credit institutions and including trade and client receivables presented as other assets). Stage 3 loans / Total loans, net Carrying amount for stage 3 loans (credit-impaired loans) in relation to carrying amounts for total loans measured at amortised cost (excluding demand deposits credit institutions and including trade and client receivables presented as other assets).

The excel file Alternative Performance Measures, available on sebgroup.com/ir, provides information on how the measures are calculated.

Definitions According to the EU Capital Requirements Regulation no 575/2013 (CRR) Risk exposure amount Total assets and off balance sheet items, risk-weighted in accordance with capital adequacy regulations for credit risk and market risk. The operational risks are measured and added as risk exposure amount. Risk exposure amounts are only defined for the consolidated situation, excluding insurance entities and exposures deducted from own funds. Common Equity Tier 1 capital Shareholders’ equity excluding proposed dividend, deferred tax assets, intangible assets and certain other regulatory adjustments defined in EU Regulation no 575/2013 (CRR). Tier 1 capital Common Equity Tier 1 capital plus qualifying forms of subordinated loans liabilities, so-called additional tier 1 instruments. Tier 2 capital Mainly subordinated loans liabilities not qualifying as Tier 1 capital contribution. Own funds The sum of Tier 1 and Tier 2 capital. Common Equity Tier 1 capital ratio Common Equity Tier 1 capital as a percentage of risk exposure amount. Tier 1 capital ratio Tier 1 capital as a percentage of risk exposure amount. Total capital ratio Total own funds as a percentage of risk exposure amount. Leverage ratio Tier 1 capital as a percentage of total assets including off balance sheet items with conversion factors according to the standardised approach. Liquidity Coverage Ratio (LCR) High-quality liquid assets in relation to the estimated net liquidity outflow over the next 30 calendar days.


This is SEB Our vision To deliver world-class service to our customers.

Our purpose We believe that entrepreneurial minds and innovative companies are key to creating a

better world. We are here to enable them to achieve their aspirations and succeed through good times and bad.

Our overall ambition To be the undisputed leading Nordic bank for corporations and institutions and the top universal bank in Sweden and the Baltic countries.

Whom we serve 2,300 large corporations, 700 financial institutions, 267,000 SME and 1.4 million private full-service customers bank with SEB.

Our strategic priorities Leading customer experience – develop long-term relationships based on valuable advice, customers’ trust in SEB as well as their appreciation of SEB’s services. Resilience and flexibility – maintain resilience and flexibility, based on capital and liquidity strength, to enable adaptation to prevailing market conditions. Growth in areas of strength – focus on profitable organic growth in areas of strength.

Business plan focus areas Advisory leadership – Provide customers with proactive, customised and valuable advice, based on customer insight and data analysis, through human and digital interaction. Operational excellence – Enhance customer value and increase process efficiency and speed by accelerating digitalisation and automation while extending the use of data. Extended presence – Broaden the offering by supplying customers with external products and extend SEB’s presence by providing products and services in customers’ digital ecosystems.

Values Guided by our Code of Business Conduct and our core values: customers first,

commitment, collaboration and simplicity.

People Around 15,000 highly skilled employees serving customers from locations in some 20 countries; covering different time zones, securing reach and local market knowledge.

History More than 160 years of business, trust and sharing knowledge. The bank has always acted responsibly in society promoting entrepreneurship, international outlook and long-term relationships.

Additional financial information is available in SEB’s Fact Book which is published quarterly on sebgroup.com/ir.

Interim Report - SEB · Assets under management SEK bn Net inflow Value change * 129 147 174 4.8...

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